As rumored Sunday, Oasis Petroleum (NASDAQ:OAS) and Whiting Petroleum (NYSE:WLL) have announced plans to combine in a $6.0b merger of equals. The transaction will create one of the largest operators in the Bakken, and allow the pro-forma entity to reduce overhead costs:
- Consideration - Whiting (WLL) shareholders will receive 0.5774 shares of Oasis (OAS) common stock plus $6.25 in cash, representing a 7.4% premium at Friday's closing prices; Oasis (OAS) shareholders will receive a $15.00/s special dividend ahead of merger close.
- Synergies - the transaction is expected to result in $65m of annual SG&A synergies, or ~1.0% of the pro-forma market capitalization.
- Debt - post payment of cash considerations and payment of the special dividend, the pro-forma entity will carry a net-debt balance of ~0.2x EBITDA.
In addition to both companies recently emerging from bankruptcy, both companies have announced a similar low-growth, high dividend strategy alongside Q4 results. Whiting (WLL) is up ~29% ytd, while Oasis (OAS) has risen by ~15% since January 1.
The two companies will host an investor call at 8:30am ET, though no slide deck has been released ahead of the call. During the call, analysts are likely to focus on the ability for management to exceed synergy estimates, as well as the go-forward strategy. With Whiting (WLL) taking partial payment in cash, and Oasis (OAS) taking a special dividend, it would seem the combined entity will stick to a low-growth, high dividend strategy.