(Reuters) - Oil and natural gas producer Roan Resources Inc said on Tuesday Citizen Energy Operating LLC, which is backed by private equity firm Warburg Pincus, would buy the company for $1 billion, including debt.
Roan said its shareholders would receive $1.52 per share, implying a total equity value of $234.2 million and a premium of 23.6% to the stock’s closing price on Monday.
Roan, which has seen its shares drop from over $16 last year to $1.23 as of Monday’s close, is among smaller firms that were looking to merge or sell operations against the backdrop of waning interest in Oklahoma’s SCOOP and the STACK basins, where the company mainly operates.
Interest in the plays seemed to have dimmed as the region’s geology proved to be inconsistent, making the basins a higher-cost area for producers and undercutting their results.
A few weeks after Chief Executive Officer Tony Moranto resigned in April, Roan had said it was studying options after receiving inquiries about a potential sale or in-basin merger.
Oklahoma-based Roan on Tuesday also announced the appointment of Rick Gideon as its new CEO, effective immediately.
Roan said it will temporarily reduce drilling and development and suspend all completion activities to allow its new CEO time to assess its operations.
The company’s earlier forecasts are no longer reliable due to the curtailment on operations, it said.
Roan said a group of banks would provide debt financing needed for the deal, while some investors have agreed to provide the equity financing.
Citi and Jefferies LLC are serving as financial advisers to Roan, while BofA Merrill Lynch is advising Citizen Energy.
Reporting by Arunima Kumar and Shariq Khan in Bengaluru; Editing by Maju Samuel