* GeoResources shareholders to get $20 in cash, 1.932 Halcon
* Offer at 23 pct premium to GeoResources's Tuesday close
* Deal expected to close in third quarter
* GeoResources' shares up 21 percent to life high; Halcon's
rise 10 percent.
April 25 Halcon Resources Corp said it
would buy GeoResources Inc for about $973 million in a
cash-and-stock deal, as CEO Floyd Wilson builds up the fledgling
company's asset base as a prelude to an eventual sale.
Wilson, former chairman of Petrohawk Energy Corp, has built
a reputation as a deal maker and created Halcon Resources after
Petrohawk was acquired by global miner BHP Billiton for
$12.1 billion last July.
Halcon, which has a market value of $1.34 billion, emerged
from Ram Energy Resources after Wilson took it private
in a $550 million deal in December.
"We may not see Floyd Wilson buying whole companies, but
we'll see more bolt-on acquisitions certainly," SunTrust
Robinson Humphrey analyst Neal Dingmann said.
Halcon may make more acquisitions, particularly in the
Utica, Bakken and Eagle Ford shale plays, Dingmann said.
The three regions are rich in oil and natural gas liquids
and the focus of most producers in the United States, who are
steadily moving away from natural gas due to decade-low prices.
Wilson has made no secret that he plans to build a portfolio
of liquids-rich assets before putting Halcon on the block a few
years down the line.
Halcon, which trades under Petrohawk's ticker "HK", said it
will divest some natural-gas weighted assets to raise additional
cash to focus on core growth areas.
The company has identified certain areas in South Louisiana
and South Texas as "divestiture candidates".
CASH AND STOCK
GeoResources stockholders will receive $20 in cash and 1.932
Halcon shares, or $37.97, for each share they own.
The offer represents a 23 percent premium to GeoResources's
Tuesday close of $30.77 on the Nasdaq.
RBC Capital Markets analysts said the deal price was "fairly
GeoResources, which has a market value of about $790
million, is primarily focused on the Bakken and Three Forks
formations in the Williston Basin in the north central United
States, the Eagle Ford formation in Texas, and the Austin Chalk
trend in the same state.
The deal, expected to close in the third quarter, will
increase Halcon's estimated proved reserves by over 150 percent.
More than two-thirds of the acreage is liquids-rich.
Halcon said the deal would immediately add to discretionary
cash flow, production and reserves on a per share basis.
Barclays and Mitchell Energy Advisors advised Halcon while
Wells Fargo Securities advised GeoResources.
GeoResources shares rose 21 percent on Wednesday to an
all-time high of $37.17 while Halcon shares rose as much as 10
percent to $10.25. Halcon shares have risen about 50 percent
since the Ram Energy deal.
SunTrust Robinson Humphrey analyst Dingmann said he expected
more M&A activity given that a range of companies across the
industry are on the look-out for liquids assets.
Eliecer Palacios, an energy sector specialist at Maxim
Group, named Goodrich Petroleum Corp, PetroQuest Energy
Inc, Petroleum Development Corp and Rexx Energy
Corp as potential takeover targets.