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Crestone Peak Resources is Acquired by Civitas Resources Inc

Civitas Resources Inc will acquire peer Crestone Peak Resources for $1.3 billion, including debt. The merger between Bonanza Creek and Extraction will create the largest exploration and production company focused on Colorado’s Denver-Julesburg Basin. Taking over Crestone, which is also active in Colorado, will further expand that footprint.

Civitas will use its stock as currency to pay Crestone Peak Resources owners, including the Canada Pension Plan Investment Board and investment firm The Broe Group, the sources said. The agreement could be announced as early as Monday.

The sources spoke on the condition of anonymity ahead of a formal announcement. Bonanza Creek, Extraction and Crestone Peak Resources did not immediately respond to requests for comment. Consolidation in the DJ basin is intensifying as oil and gas exploration and production companies grapple with regulatory restrictions in Colorado on where and how they can drill.Crestone was formed in 2016 when CPPIB and Broe acquired assets, centered around the Greater Wattenberg portion of the DJ Basin, from Encana Oil & Gas. Bonanza Creek and Extraction said last month that their merger would create Colorado’s first carbon-neutral oil and gas producer.

Extraction’s largest shareholder is investment firm Kimmeridge Energy Management, which has been pushing for measures to improve the shale industry’s green credentials which includes putting forward the creation of a carbon trading platform for the U.S. oil and gas industry. Bonanza Creek Energy and Extraction Oil & Gas will combine in an all-stock merger of equals, a deal worth about $2.6 billion, the companies announced. The combined company will be called Civitas Resources, Inc. and will be the largest pure-play energy producer in Colorado’s Denver-Julesburg Basin.

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