The Deals That Dominated the Energy Sector in Q1 2022

Despite the uncertainty roiling the oil and gas sector at the moment, the energy and natural resources sector saw five transactions valued at more than $25 million in the first quarter of 2022. In comparison to other sectors like technology, the sector saw fewer, but more valuable deals, tending to be close to or more than $1 billion in value.

The largest deal was Oasis Petroleum’s $6 billion acquisition of Whiting Petroleum. The March 7 deal is expected to close in the second half of 2022 to “bring together two excellent operators with complementary and high-quality assets to create a leader in the Williston Basin.” The deal comes at a time when oil and gas prices have spiked and there is greater instability with Russia’s invasion of Ukraine. Oasis’s legal advisor is Vinson & Elkins LLP while Whiting is advised by law firm Kirkland & Ellis LLP . This deal was one of the top 10 largest deals for Q1 2022 across all industry sectors.

The next largest deal is Chevron Corporation’s deal to acquire Renewable Energy Group in a $3.15 billion cash deal. The February 28 deal is the equivalent of $61.50 per outstanding share of Renewable Energy Group and represents a 57% premium on a 30-day average based on the closing stock price on February 25, 2022. The deal has a go shop provision and is expected to close in the second half of 2022. Chevron is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP and Renewable Energy Group by Latham & Watkins LLP. Following the deal announcement, a shareholder sued Renewable Energy Group alleging misrepresentations in its deal with Chevron.

Third is Chesapeake Energy Corporation’s $2.68 billion deal to acquire Chief E&D Holdings, LP and non-operated interests held by affiliates of Tug Hill, Inc. as both “hold high quality producing assets and an inventory of premium drilling locations in the prolific Marcellus Shale in Northeast Pennsylvania. The deal consists of $2 billion cash and 9.44 million common shares. Chesapeake is also selling its Powder River Basin assets in Wyoming to Continental Resources, Inc. for approximately $450 million cash. Chesapeake’s financial advisor is RBC Capital Markets, its legal advisor is Shearman & Sterling LLP and its communications advisor is DrivePath Advisors. Chief and Tug Hill’s financial advisor is J.P. Morgan Securities LLC and Gibson, Dunn & Crutcher LLP is serving as legal advisor. Meanwhile, Akin Gump Strauss Hauer & Feld LLP is also serving as legal advisor to Tug Hill and its affiliates.

The fourth largest deal is Falcon Mineral Corporation’s $1.9 billion all-stock deal to merge with Desert Peak Minerals to create a “premier mineral and royalty company” in the United States. Pursuant to the deal, Falcon shareholders will own approximately 27% of the combined company and Desert Mineral shareholders will own the remaining 73% of the combined company. The deal is expected to be accretive to Falcon’s shareholders and the combined company “will have an initial equity market capitalization of approximately $1.76 billion and enterprise value of approximately $1.92 billion, including Class A and Class C common stock.” The combined company will focus on the Permian Basin in western Texas/southeastern New Mexico and the Eagle Ford shale in south Texas. Falcon Minerals is represented by Latham & Watkins LLP and White & Case LLP; its financial advisors are Houlihan Lokey Capital, Inc. and Barclays. Desert Peak Minerals is represented by Vinson & Elkins LLP.

Rounding out the top five energy sector deals is Earthstone Energy Inc.’s $860 million of mixed cash and stock to acquire Bighorn Permian Resources, LLC in an effort to expand its footprint. The January 31 deal, has a 7.41% indemnity cap, the equivalent of $63.75 million. Bighorn’s legal advisor is Simpson Thacher & Bartlett LLP and its financial advisor is RBC Capital Markets. Earthstone’s legal advisor is Haynes and Boone, LLP and Jones & Keller, P.C. and its financial advisor is Johnson Rice & Company L.L.C.