Midstates Petroleum makes merger proposal to SandRidge Energy

Midstates Petroleum Company has made a proposal to merge with SandRidge Energy to create a larger exploration and production company with a 456,000-net acre operating footprint in the Mississippian Lime play.

The all-stock merger is said to be complementary in nature, and offer substantial operational synergies.

Pursuant to the proposal, SandRidge shareholders would own around 60% of the combined entity, while Midstates shareholders would hold the remaining 40%.

The combination is expected to result in annual synergies of more than $70m and projected annual free cash flow of greater than $100m.

Midstates Petroleum Company president and CEO David Sambrooks said: “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 $480m over the next five years.

“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.”

Under the offer, Midstates has proposed to supply 1.068 shares to SandRidge shareholders for each existing SandRidge share.

With a combined current market capitalisation of around $1bn, the merger will create an increased scale and enable production of more than 53,000 barrels of oil equivalent per day.

Furthermore, the combined company will own 75,000 net acres in the NW STACK play that holds upside potential.