By OGJ editors
HOUSTON, Oct. 17 -- Quest Resource Corp. announced plans to acquire Pinnacle Gas Resources Inc. in a stock-for-stock transaction, and the resulting combined company will focus on coalbed methane.
Pinnacle will become a wholly owned subsidiary of Quest. It is anticipated that Quest's stockholders will own 55% of the resulting combined parent company. Quest is based in Oklahoma City.
The merger is subject to various conditions, including approval of the stockholders of both Quest and Pinnacle. Closing is expected during first half 2008.
Terms calls for Pinnacle shareholders to receive 0.6584 share of Quest common stock for each share of Pinnacle common stock they own. Pinnacle stockholders will receive Quest common stock worth $207 million.
Jerry D. Cash, Quest president and chief executive officer, said the merger creates a geographically diversified company focused on coalbed methane. Cash will be chairman, president, and chief executive officer of the combined company.
Peter G. Schoonmaker, Pinnacle president and chief executive officer, said the merger builds substantial scale for stockholders.
"The merger combines dominant acreage and operating positions in two prolific low-risk resource plays with over 1 million acres under lease that will allow considerable growth in production, reserves, and pipeline development," Schoonmaker said.
Pinnacle Gas of Sheridan, Wyo., holds CBM acreage in the Powder River basin in northeastern Wyoming and southern Montana as well as in the Green River basin in southern Wyoming.
As of June 30, Pinnacle owned gas and oil leasehold interests in 332,000 net acres, 94% of which were undeveloped.
