SandRidge And Midstates Petroleum Company To Merge -- Mississippi Lime Shale Formation -- February 7, 2018

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SandRidge Energy, Inc. recently landed a merger deal with its rival Midstates Petroleum Company in an all-stock deal. The move is likely to create one of the largest oil players in the Mississippian Lime shale formation.

Both Tulsa-based Midstates Petroleum and Oklahoma-based SandRidge have prominent presence in Mississippian Lime and the merger is likely to unlock substantial synergies for both companies.

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The proposal also supports the prolonged efforts of Fir Tree Partners and Carl Icahn — two of the biggest shareholders in both SandRidge and Midstates Petroleum — who have long criticized SandRidge’s managerial decisions and wanted a change in the company’s leadership position.

The new entity will own more than 450,000 net acres in the core of the Mississippian Lime play with the production capacity of over 53,000 barrels of oil equivalent per day. In addition, the combined company will also hold 75,000 net acres in the Northwest STACK play.

Both companies have emerged from Chapter 11 bankruptcy after successfully completing their debt restructuring.SandRidge recovered from bankruptcy in October 2016 after reorganizing $4.1 billion in debt, while MIdstates Petroleum came out of the same in December 2016 after writing off $2-billion debt.

The combined company is thus does not have any debt and will display strong liquidity metrics with a forecasted free cash flow of up to $480 million in the next five years. The acquisition will help the combined entity to yield superior risk-adjusted returns in the coming years.