Midstates Petroleum proposes merger with SandRidge

Midstates Petroleum Co. Inc. has proposed to combine with SandRidge Energy Inc. in an all-stock merger to create a Mississippian Lime play-focused company with a 456,000-net acre operating footprint in the play with a 75,000-net acre position in the NW STACK.

Midstates Petroleum Co. Inc. has proposed to combine with SandRidge Energy Inc. in an all-stock merger to create a Mississippian Lime play-focused company with a 456,000-net acre operating footprint in the play with a 75,000-net acre position in the NW STACK.

Following Midstream Petroleum’s initial approach of SandRidge, the company sent a letter to SandRidge’s board, making its proposal public “to inform both Midstates and SandRidge shareholders of the compelling value creation potential” and to “encourage SandRidge’s board to move towards a negotiated transaction,” the company said.

The combined company, expected to produce over 53,000 boe/d, would have a projected annual free cash flow of $100 million and achieve $70 million in annual synergies, Midstates said.

Midstates Pres. and Chief Executive Officer David J. Sambrooks, proposed to lead the combined company, said Midstates is ready to “move forward immediately” to form a “stronger, more formidable company,” with zero net debt, liquidity, and “forecasted free cash flow generation of up to $480 million over the next 5 years.”

Under the terms of the proposal, SandRidge shareholders would receive 1.068 shares of Midstates for each existing SandRidge share. Midstates shareholders would own 40% of the combined company. The transaction has the support of Fir Tree Partners and Avenue Capital Group, Midstates’ largest shareholders, holding a combined 40% of the equity. Shareholder overlap between the two companies is currently 40%.

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