Dallas, Texas 04/29/2014 (FINANCIALSTRENDS) – News reports emerged yesterday that SandRidge Energy Inc. (NYSE:SD) was all set to buyout rival oil and gas manufacturer Arena Resources Inc. The Oklahoma based firm is slated to pay $1.6 billion as proceeds towards this purchase. The details of the payout are yet to emerge at this stage. People in the know have indicated that the payout to the share holders of Arena Resources will happen in the form of part cash payout and rest through stock offerings.
Cash of $2.5 per share in addition to 4.77 share of SandRidge Energy Inc. (NYSE:SD) will be paid out for every share of Arena Share that gets surrendered. The completion of the acquisition would expand the oil and gas firm’s product offering into the oil arena. This buyout bid is being explained by analysts as a strategic move by the $3.29 billion market capped oil and gas firm to expand its offerings in the oil sector, while the price of natural gas, which is its other staple product continues to suffer weakness.
Explaining the business drivers in addition to the synergies that the merger could accomplish for the firm, SandRidge Energy Inc. (NYSE:SD) President, Chief Executive Officer and Director James Donald Bennett has been quoted to have said that, “the oil market is likely to stay low for some more time, therefore we are focusing on adding more assets in our kitty”.
The latest move to expand its oil field assets inorganically, on part of SandRidge Energy Inc. (NYSE:SD) has had past precedents. The company had launched a abortive bid to buy out Crusader Energy Group Inc in the recent past, in addition to spending close to $800 million to acquire part of the oil and gas assets of Forest Oil Corporation (NYSE:FST) in the recent past. CEO Ward of Arena Resources will retain his role.