Corporate M&A

PEDEVCO Makes Unsolicited Offer to Acquire SandRidge Permian Trust

By Isha Makkar
October 14, 2020
2 minutes read
Oil & Gas Rig

NYSE-listed PEDEVCO Corp. has initiated an exchange offer to acquire all of the issued and outstanding common units of SandRidge Permian Trust. In August this year, PEDEVCO had delivered an open letter to Avalon Energy LLC, a significant unitholder of SandRidge, announcing its intention to acquire Avalon’s entire stake in the trust. Avalon subsequently rejected PEDEVCO’s offer, noting that it had already entered into an agreement with Montare Resources I LLC for the sale of its stake.

Under the terms of PEDEVCO’s offer, SandRidge Permian’s unitholders will receive 0.4 new shares of PEDEVCO common stock in exchange for each common unit of SandRidge Permian held. Based on approximately 52.5 million units outstanding, SandRidge Permian’s unitholders will receive a total of 21 million PEDEVCO shares currently valued at US$1.34 per share, amounting to a total offer value of approximately US$28.14 million.

The transaction will be implemented through SRPT Acquisition LLC, a wholly-owned subsidiary of PEDEVCO, which will merge with SandRidge Permian. The combined entity will be called SandRidge Permian and will be a wholly-owned subsidiary of PEDEVCO. The offer and withdrawal rights are scheduled to expire on November 30th, 2020, unless extended.

Houston-based PEDEVCO is engaged in the acquisition and development of oil and natural gas assets in the United States, with a primary focus on the DJ basin in Weld County, Colorado. OTC-listed SandRidge Permian is a statutory trust that was formed by SandRidge Energy Inc. under the Delaware Statutory Trust Act. The trust holds royalty interests in producing oil and natural gas properties in Andrews County, Texas. The combined entity will hold interests in around 37,000 net acres across the Permian and DJ basins, with over 235 potential drilling locations across Texas, New Mexico and Colorado.

The transaction is subject to customary closing conditions, including trustee consent, shareholder approval, government approval, stock exchange listing, and an effective registration statement.

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