Vitesse Energy, Inc. VTS recently announced an all-stock transaction deal to acquire Lucero Energy, an oil and gas producer operating on the North Dakota side of the Williston Basin. Through this $222 million deal, set to be closed in the second quarter of 2025 with the necessary shareholder and regulatory approvals, Vitesse will acquire more than 65 producing wells from Lucero.
In accordance with the terms of the agreement, in exchange for each share held at Lucero Energy, the shareholders will receive 0.01239 of a share of Vitesse common stock.
Immediate accretive benefits in earnings, operating cash flow, free cash flow and net asset value are expected by Vitesse after acquisition. Lucero’s strong balance sheet with $56 million in cash and no debt aligns with VTS’ goal of reducing outstanding borrowings and boosting its dividend payouts. On an annualized basis, the company expects to increase its dividend from $2.10 to $2.25 per share, reflecting strength in its financial position.
Post acquisition, the company will also acquire flexibility in capital spending with about two drilled, uncompleted wells and up to 50 locations in the Bakken region. Lucero’s assets will add about 6.4 Mboe (thousand barrels of oil equivalent) per day to Vitesse’s production, bringing VTS’ two-stream production to 19.4 Mboe per day.
Vitesse is also targeting annual synergies of about $3 million in general and administrative areas after the finalization of the deal.
According to Vitesse, Lucero is a very well-managed company that will easily align with its existing business and will provide various advantages after acquisition.
The deal will create a unique oil-weighted company with the majority of its assets in the prolific Williston Basin, which exhibits lower production declines, strong operating netbacks and capital efficiencies.
Two of Lucero’s board members will join Vitesse's expanded nine-member board, ensuring continuity and collaboration. However, the company will continue to be led by its executive team.
The U.S.-based Vitesse Energy is an independent energy company engaged in the acquisition, development and production of non-operated oil and natural gas properties. Currently, VTS has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Gulfport Energy Corporation GPOR,ARC Resources Ltd. AETUF and Flotek Industries, Inc. FTK. While Gulfport Energy currently sports a Zacks Rank #1 (Strong Buy), ARC Resources and Flotek Industries carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The U.S.-based Gulfport Energy Corporation is an independent natural gas and oil company focused on the exploration and development of natural gas and oil properties. The Zacks Consensus Estimate for GPOR’s 2024 earnings indicates 108.09% year-over-year growth.
Canada-based ARC Resources is engaged in the exploration, acquisition and development of oil and natural gas properties. AETUF’s expected EPS (earnings per share) growth rate for next year is 50.78%, which aligns favorably with the industry growth rate of 11.50%.
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2024 earnings indicates 125% year-over-year growth.
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