Forest Oil +40% after merger deal with Sabine Oil

Forest Oil (FST) +40.2% premarket after agreeing to merge with Sabine Oil & Gas in an all-stock transaction that will create one of the industry's largest east Texas players.

The combined company will have estimated proved reserves of 1.5T cfe (71% gas) and estimated daily production of 345M cfe (65% gas) for 2014.

Sabine unitholders will own ~73.5% of the new combined entity and FST shareholders will own ~26.5%; the combined entity will be named Sabine Oil & Gas Corp. and be run by Sabine's current executive management team.

For FST, the merger is more like a rescue, as shares have dropped 50% YTD.

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