SandRidge directors consider new offers
SandRidge Energy Inc. directors on Monday rejected a takeover proposal by Tulsa-based Midstates Petroleum Co., but said they are considering other offers.
The Oklahoma Citybased oil and natural gas producer said the rejection was based largely on “significantly differing opinions” of Midstates’ reserves and the number of economically viable drilling locations at current oil and natural gas prices. SandRidge directors also rejected Midstates’ claim that the merger would result in flat production and free cash flow of $320 million to $400 million over the next four years.
“For these and other reasons, SandRidge has concluded that accepting Midstates’s proposal would be highly dilutive and not in the best longterm interests of SandRidge stockholders,” the company said in a statement Monday afternoon.
Midstates last month publicly announced the merger deal its CEO David Sambrooks first proposed to SandRidge executives in January. Under terms of the proposal, Sambrooks would have become CEO of the combined company. SandRidge directors fired CEO James Bennett two days after the Midstates proposal was made public.
SandRidge directors said Monday that other companies also have made offers after they received the Midstates proposal. SandRidge has begun a formal process of evaluating the options, the company said Monday.
“In light of ongoing feedback from shareholders and several expressions of interest we have recently received, we have decided to engage advisers to solicit third-party proposals
third-party proposals and assist in evaluating all strategic options available to the company,” SandRidge CEO Bill Griffin said in a statement Monday.
SandRidge hired RBC Capital Markets to help it evaluate the offers.
SandRidge directors said they are considering the sale or joint venture opportunities with its North Park Basin assets in Colorado. The company said it also is evaluating other merger options and would reconsider Midstates “should it elect to participate in this competitive process.”
Sandridge directors said they are not providing a timetable for the process.
Monday’s announcement follows five months of action by SandRidge’s two largest shareholders: activist investor Carl C. Icahn and Fir Tree Partners. Fir Tree is SandRidge’s second-largest shareholder and the largest shareholder at Midstates.
In December, the activist shareholders successfully blocked SandRidge’s planned $746 million purchase of Colorado-based Bonanza Creek Energy.
Last month, SandRidge laid off 80 Oklahoma City employees and separately fired Bennett and Chief Financial Officer Julian Bott. The company now has fewer than 400 employees, including 189 in Oklahoma City.