General News | Top Story | Deals - Mergers and Acquisitions

Midstates Chatting Up SandRidge for Possible Business Combination

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   |    Tuesday,February 06,2018

[Summary: Midstates is looking to capitalize on SandRidge's failed buyout of Bonanza Creek by proposing a business combination between itself and SandRidge.

The proposed transaction would combine Midstates and SandRidge in an all-stock merger that would create the leading exploration and production company in the Mississippian Lime and STACK plays.

Under the terms of the proposal, SandRidge shareholders would own approximately 60% of the combined company and Midstates shareholders would own 40%. While SandRidge shareholders would have a larger stake in the company, Midstates proposed that the combined entity would be led by David J. Sambrooks, Midstates' President and CEO.

The companies both have acreage positions in Dewey County, Okla.

The combination would create a company with:

  • Control over 450,000 net acres in the core of the Mississippian Lime play and produce over 53,000 barrels of oil equivalent per day;
  • Own 75,000 net acres in the emerging NW STACK play currently being delineated through an attractive DrillCo and other operators that holds significant upside potential

Midstates STACK Assets:

SandRidge STACK Assets:

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ORIGINAL RELEASE:

Midstates Petroleum Company, Inc. (NYSE:MPO) ("Midstates" or the "Company") today announced that it has proposed to combine with SandRidge Energy, Inc. (NYSE:SD) ("SandRidge") in an all-stock merger that would create the leading exploration and production company in the Mississippian Lime play. Earlier today, Midstates sent a letter to the Board of Directors of SandRidge detailing the merger proposal and its strong desire to negotiate a friendly transaction. A copy of the letter is included below.

Given the highly complementary nature of the businesses, significant shareholder overlap, and the substantial operational synergies, Midstates believes that the proposed combination is attractive strategically and financially for the shareholders of both companies. Under the terms of the proposal, SandRidge shareholders would own approximately 60% of the combined company and Midstates shareholders would own 40%.

David J. Sambrooks, Midstates President and Chief Executive Officer, stated, "We are ready to move forward immediately to negotiate a merger agreement to form a stronger, more formidable company. The combined company will have zero net debt, strong liquidity, and forecasted free cash flow generation of up to $480 million over the next five years."

Mr. Sambrooks continued, "Combining these two businesses in an at-market merger would bring undeniable benefits to shareholders of both companies. The strategic fit and geographic overlap of both companies' assets in the Miss Lime and NW STACK builds critical mass, creates significant synergies, and generates superior, risk-adjusted returns."

Midstates is making this proposal public to inform both Midstates and SandRidge shareholders of the compelling value creation potential of the combination and to encourage SandRidge's board to move towards a negotiated transaction.

Strategic & Financial Rationale

Midstates believes that as one company, shareholders of Midstates and SandRidge would share in the substantial upside, and the merger would provide significant benefits to both sets of shareholders that would not be available to either company on a standalone basis.

The combined company would:

  • Achieve greater than $70 million in annual synergies, resulting in significant value creation, projected annual free cash flow of over $100 million and accretion to both sets of shareholders;
  • Have increased scale, liquidity, access to capital markets and interest from a broader investor base, driving potential multiple expansion;
  • Join highly complementary assets in the Mississippian Lime and NW STACK;
    • Control over 450,000 net acres in the core of the Mississippian Lime play and produce over 53,000 barrels of oil equivalent per day;
    • Own 75,000 net acres in the emerging NW STACK play currently being delineated through an attractive DrillCo and other operators that holds significant upside potential;
  • Be led by David J. Sambrooks, Midstates' President and Chief Executive Officer; respective shareholders to provide input on the Board of Directors;
  • Implement a strategy focused on proven assets in the Mississippian Lime that optimizes the drilling program, high-grades the combined inventory and utilizes the latest in new generation completion technology; and
  • Drive shareholder value and enhanced cash flow with prudent investment, non-core asset divestitures and a clean balance sheet.

Under the terms of the proposal, SandRidge shareholders would receive 1.068 shares of Midstates for each existing SandRidge share. Midstates is prepared to work expeditiously to close the transaction as soon as the second quarter of 2018. Any transaction would be subject to regulatory and shareholder approvals and other customary closing conditions.

Shareholder Support

The transaction has the support of Fir Tree Partners and Avenue Capital Group, Midstates' largest shareholders, holding a combined 40% of the equity. Additionally, there is significant shareholder overlap between the two companies of approximately 40%.

Advisors

Moelis & Company LLC is acting as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel to Midstates.


Search Data From Midstates Petroleum Latest Presentations



Search Data From Sandridge Energy, Inc. Latest Presentations

Key Slides found in this Presentation
Capital & Finance
        Rates of Return/ IRR
        CapEx 2018
        Operating Costs (LOE)
        Hedging
        Capital Expenditures
Data & Charts
        Bar Chart
        Table
Land & Legal
        Acreage & Land
Maps
        Leasehold Map
        Areas of Operations
        All Maps
Portfolio & Operations
        IP Rates
        Key Wells & Discoveries
        IP Rates 30-Day
        Drilling Program
        Production Rates
        Drilling - Rig Count
        Reserves
        Corporate Production Rates
        Proved Reserves
        Drilling - Wells Drilled
Well Information
        Well Cost
        Well EUR
        Well Results/Performance
        WellBore Design


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