LONDON, UK / ACCESSWIRE / November 17, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for SandRidge Energy, Inc. (NYSE: SD) ("SandRidge"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=SD. The Company announced on November 15, 2017, that it has signed a merger agreement to acquire Bonanza Creek Energy (NYSE: BCEI). The cash plus stock deal is valued approximately $746 million. The acquisition allows Sandridge to enhance its assets in the DJ Basin of Colorado. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Transaction details
As per the terms of the merger agreement, SandRidge has agreed to pay $36 for each Bonanza Creek's share of which $19.20 will be in cash and $16.80 in shares of SandRidge subject to the collar mechanism. This represents a 17.4% premium to Bonanza Creek's closing price on November 14, 2017. The offer price values the transaction at approximately $746 million, of which the cash portion is $398 million and balance in approximately 18.89 million SandRidge's shares (calculated based on the closing price of SandRidge's shares on November 14, 2017).
Once the merger is finalized, Bonanza Creek's shareholders are expected to own approximately 31.4% and 35.8% stake in SandRidge based upon the Average Parent Stock Price. Once the transaction is completed, one independent director from Bonanza Creek will join SandRidge's Board of Directors.
The Board of Directors of both companies have already approved the deal. The transaction is expected to close in Q1 2018 and is subject to regulatory, shareholders' approval, and other closing conditions.
Benefits of the acquisition for SandRidge
The acquisition is expected to be accretive to SandRidge's cash flows from Q1 2018 and result in significant cost, technical, and operational synergies. Bonanza Creek has zero debts, which makes the transaction a great buy for SandRidge and allows it to maintain a strong balance sheet. The SandRidge/ Bonanza Creek merged entity will operate more than 630,000 net acres mainly in the Rockies and Midcontinent region. The merged entity is expected to have oil production of approximately 55,000 barrels of oil equivalent per day (boe/d) as on September 30, 2017. Additionally, as part of the acquisition, SandRidge gains all assets of Bonanza Creek which include the following:
- Q3 2017 production of 15.8 MBoepd of which 52% is oil;
- Year-end 2016 proved reserves of 91 MMBoe, of which 55% is oil;
- 67,000 highly delineated net acres in the rural oil window of the DJ Basin;
- ~970 2P Niobrara and Codell locations driving future oil development opportunities;
- Stacked pay DJ Basin assets targeting Niobrara and Codell formations;
- Company-owned midstream infrastructure enhancing E&P operations;
- Mature, cash-generating Cotton Valley production;
- Zero debt and $31 million of cash on hand as of September 30, 2017.
Management Comments
Commenting on the acquisition James Bennett, CEO of SandRidge said:
"This acquisition greatly enhances our existing portfolio by adding a deep inventory of drill-ready locations in the DJ Basin of Colorado and is highly complementary to our existing North Park, Northwest STACK, and Mississippian assets. The geological and operational characteristics of Bonanza's Niobrara and Codell locations are analogous to our existing Colorado North Park assets, and we expect to benefit from the expertise of their teams. Overall, we believe this will drive strong risk-adjusted returns in both areas."
Jack Vaughn, Chairman of the Board of Bonanza Creek, added:
"This transaction represents an attractive opportunity for our shareholders to monetize a portion of their holdings through the cash consideration as well as to participate in the continued upside of the combined Company. We believe our Niobrara and Codell assets and expertise will provide a strong complement to the SandRidge story."
Brian Steck, a Director of Bonanza Creek and Partner of Mangrove Partners, one of Bonanza Creek's largest shareholders, shared:
"Mangrove is happy to support this transaction and believes that Bonanza Creek's high-return inventory in the DJ Basin provides an excellent complement to SandRidge's attractive development opportunities in the NW STACK and North Park Basin."
Incidentally, both Companies have successfully emerged from bankruptcy proceedings. SandRidge emerged from Chapter 11 bankruptcy proceedings in October 2016, while Bonanza Creek successfully emerged from Chapter 11 proceedings in April 2017. Bonanza Creek had received an unsolicited proposal from Bill Barrett Corp. (NYSE: BBG), before emerging from bankruptcy, in January 2017. However, eventually, the deal did not work out.
About Bonanza Creek Energy Inc.
Founded in 1999, Denver, Colorado-based Bonanza Creek is an independent oil and natural gas Company engaged in the acquisition, exploration, development, and production of onshore oil and associated liquids-rich natural gas in US. The Company's assets and operations are mainly in the Rocky Mountain region in the Wattenberg Field, focused on the Niobrara and Codell formations as well as in oily Cotton Valley sands in southern Arkansas.
About SandRidge Energy, Inc.
Oklahoma City, Oklahoma based SandRidge is an oil and natural gas exploration and production Company with principal focus on developing high-return, growth-oriented projects in Mid-Continent and Niobrara Shale in US. SandRidge's drilling activity is currently concentrated in two areas: the NW STACK in Oklahoma and the North Park Basin in Jackson County, Colorado. In the NW STACK, the Company is targeting the Meramec, the same formation found in the original STACK play, across its 70,000 net acres in Major, Woodward, and Garfield counties. In the North Park Basin, SandRidge is targeting multiple Niobrara benches on its 125,000-net acre position where oil content exceeds 80% of total cumulative production.
Last Close Stock Review
On Thursday, November 16, 2017, SandRidge Energy's stock closed the trading session at $16.25, climbing 1.56% from its previous closing price of $16.00. A total volume of 1.64 million shares were exchanged during the session, which was above the 3-month average volume of 244.99 thousand shares. Shares of the Company have a PE ratio of 0.13 and currently have a market cap of $574.11 million.
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