Sabine Oil & Gas LLC and Forest Oil Corporation announced Tuesday that they have signed a merger agreement for an all-stock transaction.
“Sabine and Forest’s highly complementary asset portfolios will create one of the industry’s largest East Texas players, benefiting from drilling program optimization and economies of scale,” the companies said.
Sabine and Forest have interests in Eagle Ford, as well as Granite Wash, Permian and Arkoma.
After the merger, Sabine unit holders will own 73.5 percent of the new combined entity and Forest shareholders will own 26.5 percent.
The combined entity — to be called Sabine Oil and Gas Corporation — will be headquartered in Houston, Texas.
Forest will leave its headquarters in Denver.
The merged company will be led by Sabine’s current executive management team.
The new parent company is expected to list on the New York Stock Exchange under the symbol “SABO.”
The combined entity will have a 207,000 net acreage position in East Texas, with 65,000 net acres in Eagle Ford.
It will have estimated proved reserves of 1.5 trillion cubic feet equivalent (71% gas) (as of December 31, 2013), and estimated daily production of 345 million cubic feet equivalent (65% gas) for 2014, the companies said.
The boards of directors of Sabine and Forest have each unanimously approved the transaction and Forest is recommending approval of the transaction to its shareholders.
The merger is expected to close in the third or fourth quarter of 2014.
“Forest Oil had burned cash for 12 straight quarters and the shares had plunged 97 percent since 2008 on disappointing results,” Bloomberg said.
David Sambrook –Sabine’s current President and CEO — will serve as Chairman of the Board of Directors of the new Sabine Oil & Gas, as well as President and Chief Executive Officer.
Shane Bayless will serve as Executive Vice President and Chief Financial Officer and Todd Levesque will serve as Executive Vice President and Chief Operating Officer.
The Board of Directors of the combined entity will be comprised of the existing six Sabine board members, as well as two of the current Forest board members.