SandRidge Energy has turned down a takeover bid from Midstates Petroleum following a detailed technical and financial review.
Midstates Petroleum’s offer for a stock-for-stock merger at a 60/40 exchange ratio was declined by the SandRidge board claiming it did not believe that the relative asset values of the two companies made the deal feasible at current stock prices.
The decision was taken in light of opposing views on Midstates’ proven oil and gas reserves.
SandRidge also disagrees with Midstates’ estimate that the combined business plan would result in generally flat production and free cash flow of $320m to $400m between 2019 and 2022.
SandRidge has appointed RBC Capital Markets as its financial advisor to help with the assessment of all strategic options to maximise shareholder value.
SandRidge Energy president and CEO Bill Griffin said: “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 and assist in evaluating all strategic options available to the company.
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By GlobalData“While we evaluate strategic alternatives, we will remain focused on efficiently running our business.
“During Q1 2018, our team has implemented a reduced capital plan to maximise asset value while minimising cash flow outspend, and has simultaneously implemented a significant reduction in general and administrative cash expenses.”
As part of the process to assess alternatives, the company will carry out an evaluation of divestment or joint venture (JV) opportunities associated with its North Park Basin assets.
