Civitas Resources sets talk in $2.7 billion two-part notes offering; pricing Thursday

By Paul A. Harris

Portland, Ore., June 22 – Civitas Resources, Inc. set price talk in its $2.7 billion two-part offering of senior notes (B1/BB-/BB-), according to market sources.

The deal has attracted a sizable crowd, according to a bond trader, who said that books across both tranches were at $3.2 billion and growing on Thursday morning.

The deal features $1.35 billion of five-year notes talked to yield in the 8½% area, well inside of initial guidance in the high 8% to 9% area.

Civitas is also offering $1.35 billion of eight-year notes talked to price 3/8% behind the five-year notes, in line with initial guidance.

Books close at 1 p.m. ET on Thursday, and the Rule 144A and Regulation S for life notes are set to price thereafter.

The five-year notes become callable after two years at par plus 50% of the coupon. The eight-year notes become callable after three years at par plus 50% of the coupon.

The notes in both tranches feature 35% equity clawbacks at par plus the full coupons and have 101% poison puts.

BofA Securities Inc. is the left active bookrunner. J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Citigroup Global Markets Inc., RBC Capital Markets LLC and Goldman Sachs & Co. LLC are the joint active bookrunners.

KeyBanc Capital Markets Inc., Fifth Third Securities Inc., U.S. Bancorp Investments Inc., Truist Securities Inc. and PNC Capital Markets LLC are the joint bookrunners.

TD Securities (USA) LLC, Capital One Securities Inc., Comerica Securities Inc., BOK Financial Securities Inc. and Tuohy Brothers are the co-managers.

The Denver-based oil and gas producer plans to use the proceeds plus cash on hand and borrowings under its credit facility to help fund the acquisitions of Hibernia Energy III's Midland Basin assets in their entirety and a portion of Tap Rock Resources' Delaware Basin assets.

The notes in both tranches are subject to partial mandatory redemption at par plus accrued interest split ratably between tranches if one or both acquisitions do not close by Oct. 31, 2023: $1.7 billion if the Hibernia acquisition does not close and $1.2 billion if the Tap Rock acquisition does not close.

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