Oil and gas producer SandRidge Energy on Dec. 28 backed out from its plan to buy smaller rival Bonanza Creek Energy, giving in to pressure from activist investor Carl Icahn and other shareholders.
Oklahoma-based SandRidge, which emerged from bankruptcy last year, had said in November that it would pay $746 million for Bonanza Creek to expand its presence in the Denver-Julesburg Basin of Colorado.
Icahn, who is the single largest shareholder with a 13.5% stake, had called the offer “value-destroying” and said it provides “no obvious synergies nor economies of scale."
Private investment firm Fir Tree Partners, which owns about 8.3%, had said the purchase would drain all of the oil and gas producer’s cash.
After talking to its top shareholders, SandRidge board on Dec. 28 concluded that it would not receive approval for the transaction.
As part of the mutual termination agreement, Bonanza will receive up to $3.7 million for transaction related expenses, SandRidge said.
Shares of SandRidge were up 1.9%, while Bonanza Creek were down 1.8% in aftermarket trading.
Recommended Reading
DOE: ‘Astounding’ US LNG Growth Will Raise Prices, GHG Emissions
2024-12-17 - The Biden administration released Dec. 17 a long-awaited report analyzing the effects of new LNG export projects, which was swiftly criticized by the energy industry.
Analysts: Trump’s Policies Could Bring LNG ‘Golden Era’ or Glut
2024-11-27 - Rystad warns that too many new LNG facilities could spell a glut for export markets.
DOE Report on LNG Pause Climate to Arrive Before January
2024-12-08 - The White House said it implemented a permit pause on export facilities to allow time for an analysis of LNG climate impacts.
Dallas Fed: Trump Can Cut Red Tape, but Raising Prices Trickier
2025-01-02 - U.S. oil and gas executives expect fewer regulatory headaches under Trump but some see oil prices sliding, according to the fourth-quarter Dallas Fed Energy Survey.
Sources: LNG Pause Report Will Critique Sector on Prices, Environment
2024-12-16 - The Department of Energy study tied to the yearlong pause on LNG permits may be released as soon as Dec. 17.