Civitas Resources to market $2.7 billion two-part notes offering through Thursday

By Paul A. Harris

Portland, Ore., June 20 – Civitas Resources, Inc. started a roadshow on Tuesday for a $2.7 billion two-part offering of senior notes, according to market sources.

The deal, which was set to kick off on a Tuesday morning conference call with investors, features a tranche of notes due in 2028 with initial talk in the high-8% to 9% area and a tranche of notes due 2031 with initial talk that has them coming 3/8% behind the 2028 notes.

Minimum tranche sizes will be $1 billion. Final tranche sizes remain to be determined. The expected sizes are $1.35 billion apiece.

The notes in both tranches are coming in Rule 144A and Regulation S for life formats.

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.

Credit ratings remain to be determined.

The roadshow wraps up on Thursday.

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 of the Tap Rock acquisition does not close.

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