| Today’s Upstream Updates

• Oil prices edge up as Middle East risk outweighs US demand concerns

• Natural gas bullish sentiment continues to support prices

• SM Energy announces it is acquiring XCL Resources for $2.6 billion - Deal Write Up below

| Markets - Energy Prices

Note: pricing is as of time of publishing.

| Morning News - Energy 

• Oil up as Middle Eat risks offset US demand concerns (Reuters)

• Mountain of asset sales loom after oil megamerger era (Reuters)

• Dallas Federal Reserve energy survey (Release)

• This week in petroleum showing inventory build (EIA)

• TXO Partners upsize and price its common unit offering (Release)

• US crude imports hit 2-yr high despite lukewarm demand (Reuters)

• Big investors doubling down on oil & gas stocks (OilPrice)

• Shell to build carbon capture / storage projects in Canada (Oil & Gas)

• AI and EV boom to add 290 TWh of electricity demand (OilPrice)

• Global LNG market remains in fragile equilibrium (Oil & Gas)

• Shale executives see takeovers squeezing US production (Transport)

• SM Energy agrees to acquire XCL Resources (Release)

| Deal Write-up - SM Energy Buys XCL Resources

• SM Energy and Northern Oil & Gas announced they are acquiring the Uinta Basin assets of XCL Resources for $2.55 billion

• SM Energy will own 80% (~$2 billion) and NOG will own 20% (~$510 million)

• XCL Resources is backed by EnCap Investments and Rice Investment Group

• SM Energy will be the operator

• SM announced it will increase its fixed dividend by 11%

• SM will finance the acquisition through a combination of debt and cash on hand

• Asset Details to SM Energy:

  • 37,200 net acres

  • 43 Mboe/d (88% oil)

  • 390 net locations

  • 107 MMboe proved reserves

  • 2.9x NTM adjusted EBITDA multiple

  • $59 Mboe/d production multiple

| Noteworthy from Energy X (Twitter)

• Implied US gasoline demand chart (Link)

• US gulf coast LNG buildout expectations (Link)

• Over 70% of newly drilled wells are “child” wells (Link)

| Monthly Upstream Deals

| Monthly Capital Markets

• Secondary Equity Offering 6/26/24 - TXO Partners (TXO) announced it has priced and upsized its common units offering. TXO offered 6,500,000 units, upsized from 5,000,000, at a price of $20/unit to the market. This represents a slight discount to the at the market price of around ~$20.50/unit. Underwriters have the option to purchase an additional 975,000 units. Total net proceeds expected to be $122.5 MM and will be used to help fund the cash portion of its recently announced acquisition of Williston Basin assets.

• IPO Equity 6/17/24 - Tamboran Resources (TBN) launched its initial public offering of 6,500,000 shares of common stock. IPO is expected to price between $24 and $27 per share. Underwriters will have a 30-day option to purchase 975,000 shares at the IPO price, less the underwriting discount. TBN shares will be listed on the NYSE.

• Debt 6/13/2024 - Crescent Energy (CRGY) announced the pricing of $750 million senior notes due 2033. Notes will pay an interest rate of 7.375% per year and were priced at par. Proceeds will be used to fund the cash portion of the consideration of the previously announced merger with SilverBow Resources. Should the merger not happen, CRGY will redeem the notes for their full value and unpaid accrued interest (Link).

• Debt 6/03/2024 - Diversified Energy (DEC) announced it has closed on an ABS refinancing. The $610 million principal notes with net proceeds of $592 million (net of fees, expenses and interest reserve) carry a blended fixed coupon of 7.28%. Proceeds to refinance existing ABS and reduce borrowings on Company RBL. Financing is also part of the Oaktree WI purchase. DEC noted the offering was oversubscribed with over $1.7 billion in orders from 18 investors (Link).

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Disclaimer - The information provided in this newsletter is for informational purposes only and should not be construed as investment advice. The contents and references herein do not constitute a recommendation to buy, sell, or hold any securities. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions based on the information provided herein. The authors and publisher of this newsletter are not liable for any actions taken by readers based on the information contained herei