trending Market Intelligence /marketintelligence/en/news-insights/trending/y2fH_CRTVl7PlVYQxTz57g2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Callon-Carrizo merger overcomes obstacles, meets shareholder approval

Essential Energy Insights - June 11, 2020

Webinar Replay

Deep Dive on Oil & Gas for Financial Institutions

Essential Energy Insights - May 28, 2020

Essential Energy Insights - May 14, 2020


Callon-Carrizo merger overcomes obstacles, meets shareholder approval

The drama surrounding Callon Petroleum Co.'s $3.2 billion acquisition of Carrizo Oil & Gas Inc. has come to a close with the Dec. 20 approval of the merger by Carrizo shareholders.

The merger, originally agreed upon in July, met with serious resistance from shareholders and investor advisory groups opposed to the deal. One of Callon's largest shareholders, Paulson & Co. Inc., came out quickly against the merger, saying it would "permanently impair" Callon's net value. The firm said the acquisition of Carrizo's Eagle Ford assets would strip Callon of one of its greatest value points: being a pure-play producer in the Permian Basin. Paulson suggested instead that Callon put itself up for sale.

Placed on the defensive, Callon attempted to assure investors that the agreement to acquire Carrizo would benefit them in the short and long term.

"[The acquisition] will accelerate our timeline on free cash flow, improve returns on capital and further strengthen our efforts to improve Callon's financial position," Callon CEO Joe Gatto said during the company's third-quarter earnings call. "We will be a stronger company with an advantaged cost of supply to improve our competitive position as the unconventional oil and gas business matures."

Upon shareholder approval, Gatto said: "Together with Carrizo, we are creating a leading oil and gas company that is positioned to accelerate the achievement of our stated goals regarding increasing returns on capital and sustainable free cash flow generation. As a larger enterprise, we will employ a more efficient scaled development model that will drive a lower cost of supply and underpin resilient performance over time."

While Callon's leadership and Paulson traded derisive public statements, opposition to the deal increased. Independent shareholder advisory firm Institutional Shareholder Services told Callon shareholders that the merger of the two companies would not be in their best interests. The level of opposition was strong enough that Callon and Carrizo's leadership agreed to alter the terms of the merger shortly before a Nov. 14 shareholder vote could occur.

Under the new terms of the merger, Carrizo shareholders will receive 1.75 Callon shares for each share owned, a decrease from the 2.05 shares originally agreed upon. The change means Callon will own 58% of the combined company, as opposed to the originally planned 54%.

The changes also eliminated a stipulation requiring Carrizo to reimburse Callon for expenses incurred had the transaction failed, while increasing the amount Callon would pay Carrizo in the event of a "no" vote to $10 million. If Carrizo had decided to back out of the agreement, the termination fee was dropped from $47.4 million to $20 million. The amendments also eliminated the controversial "double trigger" compensation for Callon executives should they be terminated as a result of the merger, one of the key points of contention for Paulson.

That was enough for both Paulson and ISS to come around to support the merger, albeit with some misgivings.