SandRidge Energy, an Oklahoma-based oil and natural gas firm has agreed to acquire rival Bonanza Creek for $746m in a cash-and-stock transaction to expand its acreage in the oil window of DJ Basin in Colorado.
Bonanza Creek is based in Denver, Colorado with operations focused in the Wattenberg Field in the DJ Basin and the Cotton Valley sands in southern Arkansas. Included in the deal are the 970 2P Niobrara and Codell locations which SandRidge believes would drive future oil development opportunities.
As per the merger agreement signed by the parties, SandRidge has offered to buy all of the shares of Bonanza Creek at $36.00 per share.
The merger would mean that the combined company will have 630,000 net acres in the Rockies and Mid-Continent regions, which as of 30 September, 2017 had a production of around 55,000Boepd.
SandRidge CEO James Bennett 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.”
Post transaction, Bonanza Creek’s shareholders are likely to own 31.4-35.8% of the shares of the enlarged SandRidge.
Bonanza Creek board chairman Jack Vaughn said: “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 and are excited to partner with SandRidge in growing the combined company.”
The deal will be completed based on the approval of both the companies’ shareholders along with certain regulatory clearances and customary closing conditions. The transaction is expected to be completed in the first quarter of 2018.