Oil & Gas News

SandRidge Buyout Gathers Interest

SandRidge buyout

(Reuters) – SandRidge Energy Inc. said on Friday it had been approached by 17 potential bidders for a buyout, including billionaire Carl Icahn who is fighting for control of the oil and gas producer’s board.

The activist investor, however, said in response he had no plans to make a bid soon, adding that any bid would depend on the approval of a majority of the unaffiliated shareholders.

Icahn has criticized SandRidge’s leadership, forced the removal of its chief executive officer and got the embattled company to back out of its planned buyout of rival Bonanza Creek Energy Inc.

The investor, who said in April he was willing to buy the company, will now have to wait for a June 19 shareholder vote for directors as he seeks to revamp the board with his seven preferred nominees. Icahn holds a 13.6 percent stake in the company, according to Thomson Reuters data.

“Some investors tip their hat to an Icahn-led board, as that might offer a quicker and possibly greater gain,” said David Beard, an analyst at Coker Palmer Institutional. “But it also seems that both management and Icahn want a higher stock price. Either way, shareholders should win.”

The analyst reckoned most of the potential bidders could be from Oklahoma’s SCOOP/STACK region, a fast-growing shale oil play that is attracting investment as companies look beyond the Permian basin in Texas.

Devon Energy (DVN.N), Marathon Oil Corp (MRO.N) and smaller producers such as Colorado’s Cimarex Energy (XEC.N) are some of the companies in the SCOOP/STACK region.

SandRidge, which has a market value of $544 million, has most of its production in the north-west STACK region. Its stock has risen about 18 percent since Icahn disclosed his buyout interest in April.

Earlier this month, the oil and gas producer said proxy advisory firm Institutional Shareholder Services Inc (ISS) recommended shareholders should vote for the company’s board nominees.

SandRidge also said Midstates Petroleum (MPO.N), whose all-stock bid was rejected by the company in March, did not agree to its confidentiality terms, even after month-long negotiations with the smaller rival.

Both Midstates and Icahn, however, rejected SandRidge’s claims on Friday.

“While SandRidge has offered a non-disclosure agreement (NDA) to Midstates, it would require Midstates to enter into a standstill, which is an unusual requirement for a party that has made a public offer,” Midstates said.

SandRidge has informed Midstates that it will not provide internal forecasts to the company even if it were to sign the NDA offered by SandRidge, Midstates added.

Siding with Midstates, Icahn said in a letter to shareholders that it is “inherently impossible to negotiate with a counterparty that demands unreasonable and onerous terms.”

SandRidge declined to comment when contacted by Reuters.

SandRidge’s shares closed 1.6 percent up at $15.61 on Friday, while those of Midstates closed 3 percent lower at $11.92.

 

Reporting by Akshara P and Laharee Chatterjee in Bengaluru; Editing by Saumyadeb Chakrabarty (Reuters)

 

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