In recent news, a Houston company will be partnering with another energy source business. According to reports, SandRidge Energy has agreed to acquire Dynamic Offshore Resources in a $1.28 billion purchase agreement. In this deal, SandRidge will get Dynamic's Gulf of Mexico oil fields. Dynamic is a Houston-based company, which was founded in early 2008.
SandRidge, which is based in Oklahoma, has historically focused on drilling onshore basins. However, higher production costs have made offshore properties a bargain. A source explains that as larger companies want to come onshore and compete, service costs are increasing. Furthermore, fewer companies are interested in the Gulf of Mexico because of the Deepwater Horizon disaster. This has made offshore properties a good deal. The deal is the biggest for Gulf of Mexico fields since the Deepwater Horizon rig blew up. This disaster killed 11 and was one of the worst marine oil spills in history.
The contract terms indicate that SandRidge will pay $680 million and approximately 74 million shares of SandRidge stock. The stock value was $8.02 at the time of the deal. In the acquisition process, SandRidge will keep Dynamic's 130 employees and run all of its Gulf of Mexico operations from Houston.
These two companies seem to have the technicalities of the acquisition resolved. Nevertheless, acquisitions and mergers can be a complex process. Companies must develop the criteria of an acquisition, structure a proposal, draft a purchasing agreement and identify sources of funding. For this reason, it is important that companies involved in these types of dealings work closely with knowledgeable attorneys to guarantee a sufficient transition.
Source: Wall Street Journal, "SandRidge Energy to buy Dynamic Offshore," Ryan Dezember, Feb. 1, 2012