Sitio Royalties Corp. agreed to acquire rival US oil and gas rights company Brigham Minerals Inc. in an all-stock merger valued at about $1.5 billion.
(Bloomberg) — Sitio Royalties Corp. agreed to acquire rival US oil and gas rights company Brigham Minerals Inc. in an all-stock merger valued at about $1.5 billion.
Brigham investors will get 1.133 Sitio shares for each Brigham share, the companies said Tuesday in a statement, confirming earlier Bloomberg News reporting about a potential deal.
The transaction values Brigham at $28.57 per share, based on the company’s closing price on Friday of $29.40. In the past few years, investors have pushed US oil and gas companies to agree on mergers at low deals premiums, or none at all.
Companies such as Sitio and Brigham buy royalties, which can amount to as much as 25% of a single oil or gas well’s production, making them less exposed to the operational and exploration risks borne by upstream producers.
Both Brigham and Sitio own assets in the Permian Basin, the most prolific US oil patch. The companies said the merger will enable greater access to capital.
“Our combined company will be the largest publicly traded mineral and royalty company in the U.S. by enterprise value that is focused on consolidation across a diverse set of operators and geographies,” Sitio Chief Executive Officer Chris Conoscenti said in the statement. “We will be able to pursue opportunities that few others can because of the size of our business, strength of our balance sheet, optimized cost structure and access to capital.”
Brigham was founded by Ben “Bud” Brigham, a serial shale wildcatter and entrepreneur who sold a company operating in the Bakken for $4.5 billion to Equinor ASA in 2011 and another one operating in the Permian to Diamondback Energy Inc. for $2.6 billion six years later.
Brigham raised $261 million in 2019 in an initial public offering in which it sold shares at $18 apiece. Brigham was little changed in New York trading. Sitio rose 1.9%.
(Updates with share prices in last paragraph)
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