February 1, 2012 / 9:20 PM / 8 years ago

UPDATE 3-SandRidge to buy Dynamic Offshore for $1.28 bln

* Deal consists of $680 mln in cash, 74 mln of SandRidge shares

* Deal expected to close in Q2

* Sees deal adding to its earnings, cash flow per share

* SandRidge shares down 11 percent (Adds details, analyst comment, shares)

Feb 1 (Reuters) - Oil and gas producer SandRidge Energy Inc will buy Gulf of Mexico-focused Dynamic Offshore Resources for about $1.28 billion in cash and stock as part of its 3-year plan to double its oil production.

SandRidge said it will pay about $680 million in cash and about 74 million of its shares at $8.02 apiece.

The company’s shares fell 11 percent in after-market trading, after closing at $7.83 on Wednesday on the New York Stock Exchange.

Houston-based Dynamic Offshore, which is backed by private equity firms Riverstone Holdings LLC and the Carlyle Group, had postponed its initial public offering on Tuesday.

About half of Dynamic Offshore’s production of 25 thousand barrels of oil equivalent per day (mboed) is oil. Its proved reserves were 62.5 million barrels of oil equivalent (MMboe) as of last year.

“These oil-rich assets will add reserves, production and cash flow at an attractive valuation that is consistent with the achievement of SandRidge’s three-year plan to triple EBITDA and double oil production while lowering its debt to EBITDA ratio,” SandRidge said in a statement.

SandRidge’s Chief Executive Tom Ward said the assets, which were valued at more than $50,000 per flowing barrel, will contribute free cash flow in excess of $200 million.

“They will gain a fair amount of cash flow with it, which helps offset some of their drilling needs,” Stephens analyst William Butler said.

Oklahoma City-based SandRidge said the deal, expected to close in the second quarter, will add to its earnings and cash flow per share.

The company said it had secured $725 million in committed financing from BofA Merrill Lynch, SunTrust Robinson Humphrey and Royal Bank of Scotland Plc.

BofA Merrill Lynch and SunTrust Robinson Humphrey served as financial advisers to SandRidge. (Reporting by Vaishnavi Bala in Bangalore; Editing by Sriraj Kalluvila)((vaishnavi.bala@thomsonreuters.com within U.S. +1 646 223 8780 outside U.S. +91 80 4135 5800 Reuters Messaging:vaishnavi.bala.reuters.com@reuters.net)

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