Greetings, and welcome to the Crescent Energy Investor Update Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Reid Gallagher. Thank you, Mr. Gallagher. You may begin.
Good morning, and thank you for joining this call covering Crescent's announced transaction with SilverBow Resources. Our prepared remarks today will come from our CEO, David Rockecharlie, along with SilverBow CEO, Sean Woolverton. We'll also have our CFO, Brandi Kendall, and other members of our leadership team available during Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the Federal Securities laws. These statements are subject to risks and uncertainties, including commodity price volatility, global geopolitical conflict, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We have no obligation to update any forward-looking statements after today's call. As a reminder, please limit your time during Q&A to one question and one follow-up, as this allows us to get to more of your questions today.
With that, I'll turn it over to our CEO, David.
Good morning, and thank you for joining us. We're incredibly excited today to announce that Crescent has signed a definitive agreement to acquire SilverBow Resources in a transaction that will be transformative for both our Eagle Ford footprint and our business overall. This complementary combination represents a major step forward for our business and brings together two very like-minded teams focused on long-term value creation. As I sit here with Sean today, I want to start by reflecting on the path that has brought our companies together. We are both proud of the accomplishments and growth of our businesses to date. Both companies have built significant scale over the past few years through successful execution in the M&A market, and we couldn't be better positioned today to take this next step together. We believe the combined company will be the leading growth through acquisition E&P company in North America.
This transaction delivers significant value for both of our shareholders, creating a premier scaled enterprise with an attractive portfolio of high quality, long-life assets and a strong balance sheet. The combination creates one of the largest operators in the Eagle Ford, with meaningful opportunity for combined efficiencies and significant room for further growth and value creation. The combined production and cash flow base is substantial, with roughly 250,000 barrels of oil equivalent per day of low-decline, liquids-weighted production, complemented by a deep, high-quality inventory of future development locations across the Eagle Ford and Uinta Basins. The transaction is structured as a cash election merger.
Each SilverBow shareholder will have the option to receive 3.125 shares of Crescent Class A common stock for each share of SilverBow common stock, or cash proceeds of $38 per share, with the maximum cash consideration for the transaction not to exceed $400 million. We believe this structure offers SilverBow shareholders an attractive option to receive immediate and certain value in cash, or receive Crescent shares and participate in the potential upside of a stronger, scaled, combined company, well positioned to drive long-term value. The combined company will have an enterprise value of roughly $6 billion, inclusive of SilverBow's current net debt. Pro forma for this transaction and dependent upon the final cash election by SilverBow shareholders, current SilverBow shareholders will own between 21% and 31% of the combined company on a fully diluted basis.
We built Crescent to be an attractive, returns-driven, free cash flow business with opportunistic growth through acquisition, and we believe this combination represents one of the most compelling opportunities we've seen in the market. It not only meets our underwriting criteria from a financial perspective, strong cash-on-cash returns, and immediate accretion to cash flow and NAV per share without undue risk to our balance sheet, but also provides significant strategic benefits with increased scale and enhanced operating capabilities. These strategic benefits are especially compelling in the Eagle Ford. Both Crescent and SilverBow have been focused on building scale in the Eagle Ford over the past few years, and this complementary combination builds on the successful acquisition strategies of both companies. The combined business has executed 12 Eagle Ford acquisitions over the last 3 years, totaling more than $4 billion of total transaction value.
Pro forma for this transaction, Crescent will be the second-largest operator in the basin, alongside ConocoPhillips and EOG. Nevertheless, the Eagle Ford remains one of the most fragmented basins in the Lower 48, with substantial opportunity for further growth. As we think about our broader business, SilverBow's high-quality assets complement our existing portfolio extremely well. They significantly increase our current production base while maintaining our industry-leading decline rate, and their attractive margin profile further strengthens our ability to generate stable, consistent free cash flow. Looking forward, the SilverBow assets add substantial inventory to our business, with attractive and low-risk drilling locations in a basin we know extremely well. On a pro forma basis, the combined company will have 10+ years of high-quality development inventory across the Eagle Ford and Uinta Basins.
The SilverBow inventory also adds significant optionality to commodity prices, with a valuable mix of both gas and oil-weighted locations, allowing advantaged capital allocation flexibility through commodity cycles. In short, the combined company's asset profile is well-positioned for significant and stable free cash flow generation over the long term, with balanced and attractive exposure to commodity price upside. With that strong base of free cash flow, our capital allocation priorities remain disciplined through this transaction. We will continue to put our investors first. As we've said before, our priorities 1A and 1B are maintaining a strong balance sheet and returning capital to our shareholders. While this combination is a significant one, we remain committed to maintaining our balance sheet strength. Total leverage pro forma for the acquisition is largely neutral and remains within our maximum target of 1.5 times.
We will see immediate synergies on the financing side here, as we refinance SilverBow's existing debt with new debt at our current cost of debt. We believe there is potential for further savings as our increased scale and improved credit profile drive further improvements in our financing costs. We remain committed to our return of capital strategy, and intend to maintain our current fixed quarterly dividend of $0.12 per share, which is an extremely compelling yield relative to peers. In addition, we expect our buyback program to remain active, driving further value for our shareholders. The additional cash flow from this acquisition further supports the stability and reliability of our already peer-leading capital return framework. Another highlight of this combination is the significant potential for synergies and operating efficiencies.
Not only do we expect to see the immediate impact of an improved cost of capital, but with the combined operating expertise of both businesses, we believe we can deliver significant incremental value to our existing and new shareholders through efficiencies on both capital and operating costs. We estimate a total of roughly $65 million-$100 million in annual savings, which we expect to realize over the coming years. We've demonstrated our ability to improve operations on acquired assets, and we are excited about the value that we can create together as a combined company. This combination positions Crescent as a premier mid-cap company, primed for sustainable value creation. The pro forma company will have the scale, balance sheet strength, and the capital market support required to continue to execute on our returns-driven acquisition growth strategy and deliver value for our shareholders.
Our team has a differentiated track record of growth through returns-driven M&A. We have fundamentally transformed our business and asset profile through a series of complementary transactions over the last four years. Inclusive of this transaction, we have grown at a 30% compound annual growth rate, while significantly enhancing our operating scale and strengthening our asset profile. Despite this significant growth, we've remained prudent in our underwriting and acquisition criteria, focused on opportunities to generate compelling cash-on-cash returns, drive immediate accretion, and maintain our strong balance sheet. Our last few years of growth have been complemented by a significant evolution of our positioning in the capital markets. Since we became public through our reverse merger with Contango, we've taken actions to systematically improve trading liquidity and develop investor awareness and sell side analyst interest.
We've greatly increased our public float and average daily trading volume, gone from zero research analysts to 10, and demonstrated consistent access to both the debt and equity capital markets, which all provide tailwinds towards our growth strategy. We've never been better positioned and are excited about the value that our combined company can deliver. Before turning things over to Sean, let me quickly talk about the next steps. We're expecting to close this transaction during the third quarter of this year, following a standard regulatory approval process and shareholder votes by both SilverBow and Crescent. Both boards have unanimously approved the transaction, and Crescent shareholders, representing 43% of current shares outstanding, have entered into a voting agreement to emphasize their support. Following the close of this transaction, the Crescent board will increase to 11 members, with 9 representatives from Crescent and 2 from SilverBow.
This combination represents a unique value proposition for all shareholders, and we are confident in our ability to satisfy all closing conditions to complete this transaction. With that, I'll hand things over to Sean.
Thanks, David. It's a pleasure to be here this morning with you and the rest of your team. And good morning, everyone. This is an exciting new chapter for SilverBow and a compelling value proposition for our shareholders, accelerating many of the key value drivers we were focused on delivering. The transaction delivers an attractive premium for SilverBow shareholders, and the structure of the transaction provides us with the opportunity to participate in the upside of a stronger, scaled business that we believe is positioned for significant value creation, while also having the unique flexibility to receive immediate cash liquidity for our shares. As David mentioned, this transaction creates scale and asset durability, making us one of the largest players in Eagle Ford. With scale comes the ability to capture important synergies, apply combined best operating practices, and continue to capture value-adding acquisitions.
This combination of like-minded peers positions the pro forma business for continued success above and beyond what either company could achieve on its own. In addition to having complementary portfolios, our companies share similar values and a commitment to safe and responsible operations. We firmly believe this transaction represents the most attractive value for our shareholders. This transaction is consistent with our commitment to pursuing any path that will maximize value for shareholders, and is the result of a comprehensive and thorough review of alternatives conducted with the assistance of our financial and legal advisors over the last few months, including extensive engagement between both parties, which accelerated after we both announced strong earnings results in Q1. Before handing it back to David, I would like to thank our talented team of employees for their hard work to build a great company.
Without you, we wouldn't be able to do this transaction today. With that, I'll turn the call back to David.
Great. Thank you, Sean. Before we wrap up, I want to reiterate how excited Sean and I are about this combination and the pro forma company's positioning as a leading growth through acquisition platform. The combined company will have a high quality and uniquely balanced portfolio of stable, low decline production and a deep inventory of proven drilling locations. Our portfolio is underpinned by a basin-leading position in the Eagle Ford and significant running room for further value creation. Our business generates substantial free cash flow, maintaining our strong balance sheet, allowing us to return significant cash to our shareholders, and empowering our opportunistic acquisition growth strategy. This transaction provides significant benefits to all of our shareholders and meaningfully enhances the Crescent value proposition for current and future investors.
We believe this transaction creates a must-own midcap company with significant growth potential and the discipline, stability, and capability of a large cap business. With that, I'll open it up for Q&A. Operator?
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we pull for questions. Thank you. Our first question comes from Neal Dingmann from Truist Securities. Please proceed.
Morning, both teams. Nice deal. David, my first question is maybe just around what I call sort of the deal sequence. Specifically, I don't know, any color you might be able to add on how this deal came to be. Certainly what's attractive from our side. I'm just wondering, while I know you and Brandi and the team are always looking for accretive deals, I mean, was this something that, you know, you'd shopped for a while? I'm just wondering maybe how competitive the process or just anything else you could add on, you know, how this thing came to be.
Yeah, no, great question, and, you know, look, I definitely can't speak to broader process other than kind of our engagement. But as hopefully all of our shareholders appreciate, we've been focused in the Eagle Ford for a long time. This is a great company that Sean and the team have built. So we've obviously known each other and been able to observe their performance. And so, you know, again, as Sean said in the opening, this did come together, you know, relatively recently around the, you know, obviously, announcement here. But long story short, we think this is a perfect fit, and the pro forma company is just really going to be outstanding going forward.
And that pro forma you have, that you spoke of, David, is that the 4-5 that you see that running well into next year, those 4-5 rigs, sort of, as you've been running, as the combo's been running?
Yeah, in the short term, obviously, we're not going to, you know, change any or provide any, you know, combined guidance. And as you know, we can't really do anything separately until a closing. So I think what you see is what you get for now. But our strong belief and conviction here is that the two companies together are going to create a lot more than separately, and I think we were doing really well separately.
Got it. Got it. And then just secondly, maybe for Sean, I'm just wondering, you know, obviously, besides the Kimmeridge, I'm just wondering, Sean, have you all been sort of actively shopping or anything, you know, you might be able to say on the, on the sell side? I'm just wondering maybe why you believe if now is the right time and, and you know, how does... I know there was a poison pill out there. Does this remove that as well?
Hey, good morning, Neal. Appreciate the question. You know, I think, as David mentioned, both companies have been very actively involved in the basin. You know, between the two of us, we've been the active consolidator, and so we've got to know each other over the last couple of years. And as David mentioned, more recently, our engagements kind of picked up on the strength of, you know, closing two large- you know, their acquisitions last year and ours as well. So, we're really excited on this combination.
As I've always said, SilverBow is the biggest cheerleader of consolidation in the basin, and we've said, "Hey, we do it from a buy side and the sell side." So our board management team has been very focused on creating value for all of our shareholders and has long indicated an openness to a transaction. We've really evaluated a wide range of activities and engaged with multiple parties for some time, including Kimmeridge over the last couple of years. There's a long list of information out there on our engagement with them over the past couple of years. So, you know, we're just really excited about the deal.
This transaction offers a premium for our shareholders upfront, but more importantly, gives them the opportunity to participate in what I think is going to be a phenomenal company go forward.
And does this change with the, is the poison pill still out there, or what does it do on that side?
You know, from the pill, what you're gonna see is that it's gonna be extended through the closing of the transaction, and that was agreed mutually with Crescent as part of the merger agreement.
Got it. Okay. Thank you, guys. So congrats on both sides.
Thanks, Neal.
Our next question comes from Leo Mariani from Roth MKM. Please proceed.
Hi, guys. I was hoping you could elaborate a bit more here on the synergies. If I'm reading the slides right, it sounds like you guys are expecting to kind of refinance the debt later this year. Then there's some mention of G&A synergies and then obviously, the operational synergies. Can you maybe just provide us a little bit more clarity in terms of when you plan to kind of tackle, you know, each of these items, you know, from G&A to kind of some of the ops side from a timing perspective? And then can you just also elaborate on the G&A side in terms of, you know, what you kind of may be planning to keep here in terms of SilverBow employees?
Yeah. Hey, thanks for the question. It's David Rockecharlie. To your point, hopefully the slides we put out there are pretty straightforward. But I think this is even easier given, frankly, the fact that we've both been making a lot of acquisitions over the last few years. We've both been very vocal about the improvements we've been able to make in the assets that we've acquired. And I think one of the exciting things for us about this transaction is, as Sean and I spent a lot more time together and discussed more deeply the operations and the strong employee bases we both have, we both are very good at our jobs. We're also both really good at different things in many cases.
So we feel like, the synergies are and efficiencies are pretty standard, so it's gonna be more of what you've already seen. We talked about cost of capital. That's, you know, obviously gonna be pretty, straightforward. On the CapEx side, I think we can both continue to perform well, and we've highlighted very clearly the improvements we've made on drilling and completion times, and performance enhancements there. What I would say on lease operating expenses, we've got a large base of production that's outstanding value and free cash flow generation for the investors. It also takes some time to do all the analysis. And again, we think both companies have a lot of strengths to bring to the table.
So that'll be, I think, an important lever, but it'll take us some more time to get across the whole asset base. And then on the G&A side, there's just things that, you know, companies all have to do when they're public, and so I think there's pretty straightforward stuff there that, again, we'll be able to capture immediately. But I think the most exciting thing to us is that the employees here all have a great opportunity to participate in a growth company. So we need everyone to stay focused. We've got great people that are gonna continue to make this company better. And what you're hearing from us is we hope we're not done here. You know, we want to be a investment-grade company.
That's been Crescent's strategy and statement about our ambitions, and I think this is a great step on the way there, but we feel very confident in the synergies we put forward.
Okay, no, that's helpful. And just to that point, as becoming an investment-grade company, presumably, you're gonna have to become maybe even a larger entity over time. You talked about, you know, focused growth through more M&A. Sounds like you see other opportunities, maybe post this deal to kind of roll up other parts of the Eagle Ford. Is that gonna continue to be a key part of the strategy, and do you feel like there's some interesting targets out there you eventually could go after?
Yeah, great question. The number one thing to know about Crescent and the combined company, as well, is this is a free cash flow business. So I think we're really excited that we don't have to do anything. We think we can create tremendous value. Our investors have heard us say this on previous calls. We think there's a lot of value still embedded in the assets we own. We've all brought together a great series of acquisitions, and we're not done making those great. So I think number one thing to know is we're gonna focus on the opportunities at hand. And then the acquisition strategy, you're exactly right, it's opportunistic, but we do see a significant opportunity to continue to apply our strengths there, in particular, on the operating and investment side.
When you bring those together, you know, great things can happen. And so the Eagle Ford is a great basin. It's the second most productive basin onshore in the U.S. It's the least consolidated, so huge opportunity there. And we, you know, hope to be able to find more things to do. But I think the great thing is we've got lots of great stuff to do if we do nothing, and when we do something, we feel really strongly about value creation around it.
Thank you.
Our next question comes from Oliver Hwang from Tudor, Pickering, Holt & Company. Please proceed.
Good morning, all, and thanks, congrats on the deal. You all have done a great job in driving better capital efficiency on acquired assets in recent years via both the Uinta and series of Western Eagle Ford acquisitions. So to the extent you're able to talk about it, can you all kind of walk through the running room for uplifting the performance of the SilverBow assets that you all kind of acquired here, whether from a well productivity or capital perspective? Just maybe any color on differences to speak to with respect to spacing, completion intensity, or maybe any improvements that could be made from what you all view as a best practice for things like flowback on the asset?
Yeah, I think, great, it's David. Happy to take the question. I will be brief. I think we both kind of laid out publicly the types of improvements we've made collectively, but maybe the easiest thing to say is just from looking publicly, and I can confirm, you know, based on the conversations the two management teams had, you know, together through extensive diligence. The Crescent side of the equation has clearly demonstrated significant improvements year-over-year in drilling efficiency and speed, as well as completion design, efficiency, and speed. And so speed equals dollars. We think we can continue to deliver, you know, best-in-class D&C performance.
What we also see, though, when we look across SilverBow's execution, it's been very good as well, and there's some things they do around operating these wells, both on the D&C side and in production-based optimization, that we think both of us can do better together. So I think this is a really good case of two good companies that are gonna be able to focus on increasing good performance. And we—I think we're bringing different strengths to the table, but those would be two of the things I'd highlight in particular that we each have talked about and bring here on the operating side.
Makes sense. That's helpful. And maybe for a follow-up, I know we're probably talking about a wide range of outcomes with how volatile commodity prices can be, but just any sort of rule of thumb in terms of how we should be thinking about cash taxes post the deal, and if there are any NOLs or anything to be aware of, that you'll be able to kind of take advantage of going forward?
Hey, Oliver, it's Brandi. So I would say both companies on a standalone basis, from our perspective, would be cash taxpayers over the next handful of years. We don't anticipate any material changes in the go-forward tax position for either shareholder base. But at a high level, I think we'd guide you to a similar range than that we have in the past, and that's, you know, 3%-5% of EBITDA.
Sounds good. Thanks for the time.
Our next question comes from Charles Mead from Johnson Rice. Please proceed.
Good morning, David and Sean, and the whole collected team there. David, thank you for quantifying the relative inventory contributions from Crescent and SilverBow. I'm wondering if you could go one level down, if you could, and talk about not so much the number of locations, but the character, the nature of those locations. It looks to me like you—well, you guys did have some natural gas locations that SilverBow brings more of those. But also, I'm curious if you could talk about the quality of their locations in the oil window or condensate window versus, you know, what synergy or Crescent had on a standalone basis.
Yeah, that's great. Thanks for the question. Look, quite simply, I think you've got it right, which is it's two companies with really strong, high-quality inventory. As you know, we judge everything based on cash on cash returns, so trying to make two times our money or more. What I would say is just having more inventory to choose among that is also very high quality is always a good thing. We try to run a business that is lower capital intensity, lower operational intensity. We're resulting here in this combination still with an industry-leading low decline rate in our range of 25% or below. So I think the company is well set up for, you know, more than a decade of outstanding inventory.
Maybe the way I would say it is we're both oil-weighted in terms of the drilling we're doing today and the future opportunity, but we love adding even more high-quality gas-weighted locations to be opportunistic around from a capital allocation perspective. But I think the great thing, long story short, on our side, is when we look at the portfolio locations they built, it stacks up really well with ours, which means, you know, we would drill, you know, their high-quality inventory or ours right now, and we think we've got lots more of it than we had prior to this transaction.
Yeah. Hey, Charles, this is Sean. I'll just add a little bit to David's comments, because we've always said a key ingredient, right, for a transaction is depth of inventory, amongst all the other things that David's spoken to. I mean, for us, that was key here. One of the things that we really like about the opportunity is the acceleration of a shareholder's return program for our shareholders. So that becomes, you know, brought forward significantly. What's amazing, right, to think about SilverBow, where it's come from, is a couple of years ago, we had a stated strategy to get to a balanced commodity mix. This company has that. In fact, this company is more weighted liquids than gas.
So we were excited about that strategy, that this company will maintain of having a balanced commodity mix. The optionality to like what we've proven out is still gonna be there to shift gas, shift capital between oil and gas, depending upon the prevailing commodity price. So it just checked a ton of, ton of boxes for us. So, you know, I think the inventory here is remarkable.
Got it. Thank you, David. Thank you, Sean. That's it for me.
Our next question comes from Michael Scialla from Stephens. Please proceed.
Good morning, everybody, and congrats on the deal. You mentioned the leverage here is gonna stay pretty much the same for both companies. Just wondering how you're thinking about future debt reduction, if there is any goal and timeline there that you might be targeting?
Hey, Mike, it's Brandi. Good question. So I would say at a high level, this transaction's in line with how we think about our leverage target. So up to 1.5 times in an acquisition scenario. We did mention that we have secured committed financing in place to close the transaction. As you've heard from us before, we have a preference for longer-term institutional capital versus being overly reliant on the bank market. So again, we'll be opportunistic just with respect to terming that out. But the exciting thing here is this business generates a ton of free cash flow.
So even if we go up to or towards that 1.5x maximum, we do quickly kind of delever back to so close to the 1x over the course of next year.
I appreciate that, Brandi. And just curious if you talked about the inventory here, the combined company's inventory. Just wondering if there's any thoughts around potential non-core asset sales following the deal?
So no formal divestiture program tied to this transaction. We've historically been opportunistic around divesting non-core assets. We talked about this on our last earnings call a week or two ago, but over the past 18 months, we've sold $150 million of non-core assets. I would say no change there, and it's just safe to assume that we're always in the market kind of evaluating opportunities to continue to core up our position.
Yeah, and the only thing... This is David. The only thing I'd add to that, you know, hopefully everyone has seen since we've gone public that we've really been adding in our core areas of the Eagle Ford and Rockies, and the divestitures have been in the non-core areas, as you suggest. So I don't think we see any change in that.
Sounds good. Thank you.
Our next question comes from Tarek Hamid from JP Morgan. Please proceed.
Hey, good morning.
Hey, Tarek.
On the targeted synergies, just wonder if you had any rough estimate of cost to achieve those synergies, just to help us kind of think about the flows there?
Yeah, good question. You know, look, at the risk of maybe being a little bit off zero. I do know, I do know what you're asking, since we will have to spend money to make money, but no, these are all regular way things of just, you know, doing our jobs better and really putting these two good teams together and getting the most, getting the most out of it. So, no, we don't, we don't expect any. I think the only cost I'd, I'd highlight is it's gonna take us some time. You know, that'd, that'd be the only thing I'd, I'd highlight, though.
All right. And then, you guys obviously have built an incredible business. This is obviously a great acquisition for you, but it does definitely increase your focus on the Eagle Ford. So just would love to get your thoughts on basin diversity and sort of, is there a, a desire to kind of go out there and either grow the Uinta or, or increase basin diversity kind of after this trade?
Yeah, I'd say I don't mind getting concentrated and compared to Conoco and EOG. So we feel really good about the position in the Eagle Ford and the size of it, and we would love to continue to get better and bigger there if it's possible. Again, everything is cash-on-cash returns driven. As you know, we like having the balance in the business as well. So I think the Rocky Mountain region has been a great place for us. And just as a reminder, we operate in two business segments. So we like this sort of mid-cycle shale opportunity. We also like the conventional low-decline business. We haven't really been able to find anything attractive from an acquisition perspective in that area for a while, and that's okay.
We're willing to be really patient, but we like where we are, and I think we'd love to continue to add to the business where we're good at our jobs, and the valuations are right. But everything's gonna be opportunistic and cash-on-cash driven.
I appreciate that. And just last one for me, if I could sneak it in. You know, have you guys had the opportunity to engage with any existing SilverBow shareholders prior to the transaction, or is that something you're gonna be looking to do over the next week or two?
Hey, Tarek, this is Sean. Appreciate that question. As you might expect, we've had a tremendous amount of dialogue, we being SilverBow, with our shareholders over time and very much so over the past few weeks. I think David and I are looking forward to the opportunity to further those discussions in the coming weeks ahead, and I'm excited for our shareholders to get to know the Crescent team even more and really, you know, give them the insight of what the quality of this transaction is. So, definitely, as we move forward, folding the SilverBow shareholders into the mix is gonna be a discussion David and I will be having.
Yeah, and this is David. From my perspective, we love talking to our investors, and so we're really looking forward to engaging with Sean and his team and the SilverBow investors.... And we wanna keep as many investors excited about this combined company as we can. So, we always have been very active on our side of the equation here, and we'll continue to be so. And I think the combined company investors can expect us to maintain that frequent, active, and you know, valuable dialogue.
Got it. I'll jump back in the queue. Congratulations on the transaction.
Our next question comes from Tim Rezvan from KeyBanc Capital Markets. Please proceed.
Good morning, everybody, and thank you for taking my question. I wanted to start diving back into the synergies a little bit. You know, pretty wide goalpost, $65 million-$100 million. I recognize it's early days. So I had a couple questions related to this. The cost of capital, obviously, the SilverBow second lien is out there as an opportunity. So is there anything that would preclude you from refinancing that now, if market conditions were supportive of that? Is that something that's on the table? That's my first question on that.
Hey, Tim, good question. It's Brandi. As I mentioned earlier, I think we'll be opportunistic just with respect to how we think about refinancing the SilverBow debt here, including the second lien.
Okay, that's fair. That's fair. And then, on the G&A side, you talked about up to $10 million. You know, the cash G&A for SilverBow standalone today is about $25 million. So it's, you know, call it 40% or less. And is this sort of a multi-year synergy target? And related to that, have you thought about what the sort of broader leadership will look like, kind of below the, you know, the C-suite?
Yeah, I think this is David, that you should assume we're focused on making sure that the businesses operate really well on a standalone basis between now and the closing that we're focused on. And then we wanna have an outstanding transition and make sure we get the best out of both sides. I think that's what you're really hearing from Sean and from me today is, these businesses are both really well-positioned independently, but together it's just so much better. And so we've got to make sure that we do that the right way. And this is still a growth company. So I think long story short is, you know, I was a high school athlete, not a college athlete.
The three-pointer came out when I started playing, and you know, you mentioned a wide goalpost, so I'm gonna switch to basketball on you. We're gonna get a lot of shots here, and we're gonna get a lot of them right. I think our goal is to always outperform. But these synergies are in line with things that we already know how to do collectively across the two companies, and I think we have really high confidence that we're gonna make this happen, in a, I'll call it appropriate timeline. Other than that, you know, we gotta kinda get to closing and then get after it.
Okay, fair enough. I know it's early days. Thank you. That's all I had.
Our next question comes from Kevin McCurdy, from Pickering Energy Partners. Please proceed.
Hey, good morning, and congratulations on the deal. The combined company will have a fairly significant gas production and plenty of runway from an asset perspective. Can you talk about your gas marketing position and how that might change with the deal? And then as a follow-up, how would you think about capital allocation between the gas and liquids window if gas prices improve to, let's say, like $4 next year? Thank you.
Yeah. Sorry, that was a lot. So, I'll make sure that I hit both pieces of that question, I think. Yeah, look, we've always felt very strongly about building a portfolio that we have control over. So we try to make sure we've got control of our capital. We don't go out and chase lease exploration. We don't do exploration per se. And same thing, we don't wanna take on assets that have, you know, significant challenges getting product to market. So simple answer, we feel great about the business. We also feel great getting invested in some more natural gas opportunity at these prices. And, I think the combined business will have a better marketing position than it does separately.
One of the things you've seen from us, through our Western Eagle Ford acquisition last year, we've been able to make meaningful improvement on the marketing side. So that's straight into the top line of revenue and goes straight to the bottom line to shareholder value. Long story short, we feel great about what we have, but I'm confident there are more synergies on the marketing side that we're not talking about that we'll hopefully go get after. But no fundamental risk we're worried about here, if that was the question.
Thanks for that. And then just I guess the follow-up was on capital allocation. You know, if we get a rally in gas prices, how would you think about balancing capital between the gas and liquids window?
Yeah. So we're, again, opportunistic, but it's all about value with us. And I think we've got a great inventory of locations that are proven. We know what we're gonna get, and we don't make quick moves up when prices get better. So what I would say is, you know, fundamentally, the Crescent approach is, when prices are going up, that creates a lot more free cash flow, and that should be for the benefit of the shareholders. So we wouldn't see adding rigs, but would we move the allocation of capital around to the highest areas of return? Absolutely. So we love the optionality that Sean and his team have built.
We're really excited to add it to our portfolio, and I think you can expect, call it, more of the same in terms of the thinking around capital allocation and return of capital, but just a better portfolio to do it, to do it across.
Appreciate that. Thank you.
This concludes our question and answer session. I would like to turn the floor back over to David Rockecharlie for closing comments.
Great. Sean pointed at me, so I guess I get to do it. But we've really enjoyed watching what the team at SilverBow has done. We're thrilled to be able to combine these two businesses that are gonna be even better together. And we're very excited about the opportunity ahead for both of our shareholders. So we look forward to a lot of engagement, making sure people understand the value proposition. But I think the great thing is, we're collectively gonna keep doing what both of us were doing separately, which is making sure that we make good capital decisions, apply great operating practices with the great teams that we've both built, and continue to be opportunistic around value creation, while staying focused on free cash flow.
Again, thanks for joining us today, and we look forward to many more conversations.