Crescent Targets 1.5x Leverage by End-2027 After Devon Deal
Key Facts
Crescent Energy’s chief financial officer said the company is targeting consolidated leverage of about 1.5x at the end of 2027, assuming it completes the acquisition of Devon’s Eagle Ford assets and pays its fixed dividends. The target sets a timeline for reducing debt following a large deal that has yet to close. Management said debt reduction would be the primary use of free cash flow after dividends. Reaching the target depends on completing the deal and the company’s ability to direct cash toward paying down obligations. Management also set a longer-term target of reducing leverage to about 1x by the end of 2028, on a pro forma basis after the acquisition.
The Devon deal remains central to these calculations: Crescent announced in October an agreement to buy the assets for an estimated net price of $3.85 billion. The assets include net production of about 68,000 barrels of oil equivalent per day and more than 600 Tier 1 locations, according to company estimates. The deal had not closed when the results were announced, and the company expected it to close in the fourth quarter of 2026 or early 2027, subject to customary closing conditions. The 2027 leverage target is therefore tied to the timing of the acquisition’s completion and the assets’ financial impact after they are added. Crescent estimated annual savings related to the deal at about $140 million, from drilling and completion, operating and marketing costs.
Third-quarter results showed growth in cash generation metrics, with Adjusted EBITDAX up 62% year over year. The company attributed the increase mainly to additional production from the Vital Energy merger and higher oil prices. Levered free cash flow also rose 79% from the same quarter a year earlier. The company said the increase in Adjusted EBITDAX was partly offset by a $121.3 million rise in development spending. Chief Executive David Rockecharlie said the company delivered higher production, lower capital spending and higher free cash flow than the market expected during the quarter. The results provide a financial backdrop for management’s debt-reduction path, without removing the target’s dependence on completing the deal.
At the end of September 2026, Crescent said it had about $2.0 billion in liquidity and leverage of about 1.5x, with no near-term debt maturities. These figures precede the completion of the Devon deal and therefore do not represent leverage after the acquisition. The company also raised its target for savings from its Permian assets to more than $300 million, saying it had achieved about $295 million as of the results announcement. The company is paying a fixed cash dividend of $0.12 per share for the third quarter, payable on November 30 to shareholders of record on November 16, 2026. Management said debt reduction would take priority after these fixed dividends, setting out how free cash flow will be used.
The chief financial officer said Crescent had hedged nearly 60% of its oil production for the first half of 2027, 50% for the second half of that year and 20% for the first half of 2028, on a pro forma basis after the deal. She said on the call, "About 60% of our oil production is hedged in the first half of 2027, about 50% in the second half, and about 20% in the first half of 2028." These hedges define the share of production covered during the periods cited, while the figures remain calculated on a pro forma basis after the acquisition. The company had scheduled its third-quarter 2026 results call for November 3, 2026, at 10 a.m. Central time, or 11 a.m. Eastern time. In the last completed trading session before the target was announced, the stock closed at $13.47 on November 2, 2026.