SandRidge Energy, Inc. to Acquire Dynamic Offshore Resources, LLC for Consideration of $1.275 Billion

abarrelfullabarrelfull wrote on 06 Feb 2012 13:14
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SandRidge Energy, Inc. (NYSE: SD) has entered into an agreement to acquire Dynamic Offshore Resources, LLC for aggregate consideration of $1.275 billion consisting of approximately $680 million in cash and approximately 74 million shares of SandRidge common stock valued at $8.02 per share. These oil rich assets will add reserves, production and cash flow at an attractive valuation that is consistent with the achievement of SandRidge's three year plan to triple EBITDA and double oil production while lowering its debt to EBITDA ratio. Dynamic Offshore Resources operates primarily in water depths of less than 300 feet and their current production is approximately 25 Mboed. Dynamic's year-end 2011 proved reserves are 62.5 MMboe and are valued at approximately $1.9 billion using SEC net present value discounted at 10 percent (PV-10). Of these reserves, 80% of the value and the quantity are proved developed. Approximately 50% of Dynamic's current production and proved reserves consists of oil. The acquisition will be accretive to SandRidge's earnings and cash flow per share as well as improve its leverage metrics.

Tom L. Ward, Chairman and CEO of SandRidge, commented, "The value of this acquisition will be evident immediately in our results. We are acquiring these assets for less than PV-10 of the proved developed reserves and at just over $50,000 per flowing barrel. Additionally, we expect these operations to contribute significant free cash flow in excess of the anticipated annual drilling and recompletion capital budget of $200 million."

SandRidge has secured $725 million in committed financing from BofA Merrill Lynch, SunTrust Robinson Humphrey and The Royal Bank of Scotland plc that the company may use to fund the cash portion of the consideration. In addition, the company's $790 million borrowing base facility remains undrawn. The transaction is expected to close during the second quarter of 2012, subject to customary closing conditions.

BofA Merrill Lynch and SunTrust Robinson Humphrey served as financial advisors to SandRidge in connection with the acquisition. SandRidge is represented by Covington & Burling LLP. Dynamic is represented by Vinson & Elkins LLP.


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