Civitas strikes $4.7bn Permian basin deals

BY Richard Summerfield

Civitas Resources has agreed to acquire oil & gas operations in the Permian Basin managed by private equity firm NGP Energy Capital Management for $4.7bn.

The deals will see Civitas acquire oil producing assets in the Midland and Delaware Basins of west Texas and New Mexico. The agreements were signed with affiliates of Hibernia Energy III, LLC and Tap Rock Resources, LLC. Under the terms of the deal, Civitas has agreed to acquire a portion of Tap Rock Resources’ assets and all of Hibernia Energy III’s operations. The company will pay cash, using a mix of existing reserves and debt, and issue 13.5 million shares to NGP.

The deals are expected to close in the third quarter of 2023. The two definitive agreements will see Civitas acquire oil producing assets from Hibernia Energy’s Midlands area of west Texas for $2.25bn in cash, and from Tap Rock Resources for Delaware area assets in New Mexico for $2.45bn, which includes $1.5bin in cash.

“These accretive and transformative transactions will immediately create a stronger, more balanced and sustainable Civitas,” said Chris Doyle, president and chief executive of Civitas. “By acquiring attractively priced, scaled assets in the heart of the Permian Basin, we advance our strategic pillars through increased free cash flow and enhanced shareholder returns. We will soon have nearly a decade of price-resilient, high-return drilling inventory. Our strong capital structure allowed us to capture these transformational assets, and, importantly, behind the strength of the pro forma business, we have a clear path to reduce leverage and maintain long-term balance sheet strength.”

The combined transactions will add 68,000 net acres in the Midland and Delaware basins and will add combined proved reserves of 335 million barrels of oil equivalent (boe), as at the end of 2022. The assets will increase Civitas’ existing production by 60 percent, adding 100,000 boe per day of current production. At present, Denver-based Civitas currently operates on more than 500,000 net acres and produces roughly 160,000 boe per day.

Civitas said the cash flow generated by the assets was a significant factor in its pursuit of a deal. The assets will allow Civitas’ dividend payments in 2024 to be boosted by around 20 percent. To help the company repay the debt it will be using to fund the acquisitions, Civitas also announced that it would have to halve its $1bn share buyback target, which was initially announced in February and was set to run to the end of 2024.

NGP provided Tap Rock with capital in 2016 and backed Hibernia with $250m of equity in 2017.

News: Civitas Resources enters Permian basin in $4.7 billion deals

Merger of equals: Patterson-UTI and NexTier combine in $5.4bn deal

BY Fraser Tennant

In a merger that creates an industry-leading drilling and completions services provider, Patterson-UTI Energy, Inc. is to combine with NexTier Oilfield Solutions Inc. in an all-stock transaction valued at approximately $5.4bn.

Under the terms of the definitive agreement, NexTier shareholders will receive 0.7520 shares of Patterson-UTI common stock for each share of NexTier common stock owned.

Moreover, upon closing of the transaction, Patterson-UTI shareholders will own approximately 55 percent and NexTier shareholders will own approximately 45 percent of the combined company on a fully diluted basis. The merger is expected to be tax-free to shareholders of both companies.

Patterson-UTI is a leading provider of oilfield services and products to oil and natural gas exploration and production companies in the US and other select countries. NexTier is an industry-leading US land oilfield service company, with a diverse set of well completion and production services across active and demanding basins.

The combined company will operate under the name Patterson-UTI Energy, Inc.

"This merger unites two top-tier and technology-driven drilling and well completions businesses, creating a leading platform at the forefront of innovation,” said Andy Hendricks, chief executive of Patterson-UTI. “As one company, we will have a significantly expanded, comprehensive portfolio of oilfield services offerings across the most active producing basins in the United States, along with operations in Latin America.”

The transaction has been unanimously approved by the boards of directors of both companies.

“We believe offering a comprehensive suite of solutions on one integrated platform will position the combined company as the partner of choice for a greater number of customers across geographies and throughout the full well lifecycle,” said Robert Drummond, president and chief executive of NexTier. “We are confident that together, we will be able to drive efficiencies across the portfolio and unlock more value for shareholders and customers than either organisation could achieve on its own.”

The merger is expected to close in the fourth quarter of 2023, following Patterson-UTI and NexTier shareholder approval, regulatory approvals and satisfaction of other customary closing conditions.

“Together, we will better serve our employees, shareholders, customers, suppliers and the communities in which we operate,” concluded Mr Hendricks. “We look forward to working with the NexTier team to successfully bring our two companies together.”

News: Patterson-UTI, NexTier merge to form $5.4 billion oilfield services firm

AstraZeneca and Quell in $2bn-plus deal

BY Fraser Tennant

In the latest of a series of deals involving emerging forms of cell therapy, Cambridge-based drugmaker AstraZeneca is to collaborate with biotechnology start-up Quell Therapeutics to develop cell-based treatments for autoimmune diseases.

Under the terms of the agreement, Quell will receive $85m upfront from AstraZeneca – which comprises a predominant cash payment and an equity investment – and is also eligible to receive over $2bn for further development and commercialisation milestones, if successful, plus tiered royalties.

The collaboration between AstraZeneca and Quell Therapeutics will develop multiple engineered T-regulator (Treg) cell therapies that have the potential to be curative in type 1 diabetes and inflammatory bowel disease indications.

“We are extremely pleased to have AstraZeneca on board as our first major partner,” said Iain McGill, chief executive of Quell Therapeutics. “This collaboration builds on our pioneering work to develop exquisitely engineered, multi-modular Treg cell therapies for immune disorders and provides excellent validation for the technologies and capabilities we have established.”

In addition, Quell’s proprietary toolbox of Treg cell engineering modules, including its innovative Foxp3 Phenotype Lock will be leveraged to develop autologous multi-modular Treg cell therapy candidates for major autoimmune disease indications.

“This is a very exciting collaboration with Quell as we look to expand our next-generation therapeutic toolbox and explore the untapped potential with Treg cell therapies in autoimmune indications,” said Mene Pangalos, executive vice president of BioPharmaceuticals R&D at AstraZeneca. “This is aligned with our strategy to target underlying disease drivers to stop or slow disease progression and ultimately accelerate the delivery of transformative care to patients with chronic autoimmune conditions.”

A global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines in oncology, rare diseases and biopharmaceuticals, AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.

Mr McGill concluded: “We are proud and excited to partner our leading science with the deep experience of AstraZeneca to accelerate the application of our Treg cell therapy platform in major autoimmune disease, where we believe there is a broad opportunity to reset immune tolerance and drive durable responses for patients.”

News: AstraZeneca signs $2 billion agreement with Quell to develop cell therapies

Novartis to acquire Chinook for $3.2bn

BY Richard Summerfield

Pharmaceutical firm Novartis has agreed to buy clinical stage biopharmaceutical company Chinook Therapeutics in a deal worth up to $3.5bn.

The transaction values Seattle-based Chinook at $40 a share, compared to Friday’s closing price of under $24, a premium of 67 percent. The agreement includes another $300m if certain regulatory milestones are reached. The deal is subject to approval from the stockholders of Chinook and regulatory clearances and will conclude in the second half of 2023. The transaction has been unanimously approved by the boards of directors of both companies.

The deal is a merger of a newly formed subsidiary of Novartis with Chinook, which has two late-stage medicines currently under development to treat IgA nephropathy (IgAN), a rare, progressive chronic kidney disease.

Novartis is pursuing Chinook to take control of two late-stage drug candidates. The most advanced of the assets is atrasentan, an oral endothelin A receptor antagonist that Chinook picked up from AbbVie in 2019 in a deal worth up to $135m in milestones.

“IgA Nephropathy is a devastating disease mostly affecting young adults and potentially leading to dialysis or kidney transplantation,” said Vas Narasimhan, chief executive of Novartis. “We are excited by this unique opportunity to address one of society’s most challenging healthcare issues, with the potential to bring additional much-needed treatment options to patients. We look forward to closing the deal, to a smooth transition for Chinook employees and to welcoming them to Novartis.”

“We are pleased that Novartis recognizes the significant value that the Chinook team has built with our pipeline of clinical and preclinical programs for patients with rare, severe chronic kidney diseases,” said Eric Dobmeier, president and chief executive of Chinook Therapeutics. “We believe this transaction is great news for kidney disease patients and the programs we have built at Chinook. Through this merger, Novartis can apply its substantial resources to pursue broader development efforts and commercialization of atrasentan, zigakibart (BION-1301) and other programs in our pipeline to build its global renal therapeutic area.”

News: Novartis to buy Chinook for up to $3.5 bln in boost to late-stage pipeline

Data centre operator Cyxtera files for Chapter 11

BY Fraser Tennant

In a bid to put itself on a more solid financial footing, data centre operator Cyxtera Technologies Inc. and certain of its subsidiaries has filed for Chapter 11 bankruptcy protection.

Cyxtera’s bankruptcy filing – which does not include its subsidiaries in Germany, Singapore and the UK – is pursuant to a previously disclosed restructuring support agreement (RSA) it reached with certain of its lenders holding over two-thirds of its outstanding term loan.

The company expects to use the Chapter 11 process to strengthen its financial position, meaningfully deleverage its balance sheet and facilitate the business’s long-term success.

In addition, Cyxtera has received a commitment for $200m in debtor-in-possession (DIP) financing from certain of the term lenders, which is convertible into an exit facility upon the company's emergence from the court-supervised process. This new financing is expected to provide sufficient liquidity to support Cyxtera during this process and beyond.

“We have thoroughly evaluated options to enhance value for the company and our stakeholders,” said Nelson Fonseca, chief executive of Cyxtera. “Together with our lenders, we determined that initiating this process is the best path forward for Cyxtera and our stakeholders as we pursue new opportunities for growth.

“We appreciate the significant support from our lenders, which will enable us to move through this process as quickly as possible,” he continued. “We are confident these steps will enable us to position our business for the long term as we continue serving our customers with innovative services and the highest levels of support.”

A global leader in colocation and interconnection services, with a footprint of more than 60 data centres in over 30 markets, Cyxtera provides more than 2300 enterprise and government customers with the technology solutions they need to scale faster, achieve financial goals and gain a competitive advantage.

“Our recent business momentum and the high demand for our global data centre platform are a testament to the hard work and commitment of our team, as well as to the continued support of our customers and business partners,” concluded Mr Fonseca. “We look forward to emerging from this process as a stronger organisation with additional financial flexibility to drive Cyxtera’s next phase of growth.”

News: Data-center operator Cyxtera files for bankruptcy