By Jonathan Stempel
NEW YORK, April 4 (Reuters) - SandRidge Energy Inc, an oil and gas exploration company, on Sunday said it agreed to buy rival Arena Resources Inc for about $1.55 billion, boosting its exposure to oil as the price of natural gas falls.
The transaction values Arena at $40 per share, a 16.8 percent premium over its Thursday closing price of $34.26. Arena shareholders will receive 4.7771 SandRidge shares and $2.50 in cash for each Arena share.
SandRidge, based in Oklahoma City, Oklahoma, said the acquisition will make it one of the largest producers of West Texas conventional oil and gas.
SandRidge Chief Executive Tom Ward said the merger adds low-risk drilling opportunities, while extending the company's move since late 2008 to boost oil production and reserves.
'This makes us a company more balanced between oil and gas,' he said in an interview. 'If you were to find an equivalent amount of oil and natural gas in a well today, it would be 10 times more valuable to pursue oil.'
Natural gas prices have fallen about 26.5 percent this year, while oil prices are up 7.4 percent to more than $85 a barrel, according to Reuters data. Oil traded below $35 a barrel as recently as February 2009.
The combined company's management and board of directors will come entirely from SandRidge, Ward said.
Arena had about 38.79 million shares outstanding as of March 1, according to a regulatory filing. The Tulsa, Oklahoma-based company did not immediately return a call seeking comment.
The transaction is expected to close in the second or third quarter.
SandRidge shares closed Thursday at $7.85.
Deutsche Bank Securities LLC and the law firm Covington & Burling LLP advised SandRidge. SunTrust Robinson Humphrey and the law firm Johnson & Jones PC advised Arena.
(Editing by Leslie Adler) Keywords: ARENA/SANDRIDGE (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, April 4 (Reuters) - SandRidge Energy Inc, an oil and gas exploration company, on Sunday said it agreed to buy rival Arena Resources Inc for about $1.55 billion, boosting its exposure to oil as the price of natural gas falls.
The transaction values Arena at $40 per share, a 16.8 percent premium over its Thursday closing price of $34.26. Arena shareholders will receive 4.7771 SandRidge shares and $2.50 in cash for each Arena share.
SandRidge, based in Oklahoma City, Oklahoma, said the acquisition will make it one of the largest producers of West Texas conventional oil and gas.
SandRidge Chief Executive Tom Ward said the merger adds low-risk drilling opportunities, while extending the company's move since late 2008 to boost oil production and reserves.
'This makes us a company more balanced between oil and gas,' he said in an interview. 'If you were to find an equivalent amount of oil and natural gas in a well today, it would be 10 times more valuable to pursue oil.'
Natural gas prices have fallen about 26.5 percent this year, while oil prices are up 7.4 percent to more than $85 a barrel, according to Reuters data. Oil traded below $35 a barrel as recently as February 2009.
The combined company's management and board of directors will come entirely from SandRidge, Ward said.
Arena had about 38.79 million shares outstanding as of March 1, according to a regulatory filing. The Tulsa, Oklahoma-based company did not immediately return a call seeking comment.
The transaction is expected to close in the second or third quarter.
SandRidge shares closed Thursday at $7.85.
Deutsche Bank Securities LLC and the law firm Covington & Burling LLP advised SandRidge. SunTrust Robinson Humphrey and the law firm Johnson & Jones PC advised Arena.
(Editing by Leslie Adler) Keywords: ARENA/SANDRIDGE (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.