Energy Partners Ltd agreed to buy Oil and gas company Stone Energy Corp for $1.4 billion, the companies said on Friday, as EPL looks to boost its exploration and production abilities in the Gulf of Mexico.
Under the definitive agreement, EPL would pay $51 for each Stone share, in either cash or stock, about 10 percent higher than the closing price for Stone shares on Thursday. Stone's shares rose in early trading on Inet.
Assuming the maximum number of shares are issued, EPL shareholders will own 54 percent of the combined company, and Stone shareholders will own 46 percent.
EPL, an independent oil and gas exploration and production company, will also refinance $800 million of Stone debt as part of the deal. Oil and gas acquisitions have increased as commodity prices have surged, and producers have looked for new sources of supply.
The EPL and Stone deal was announced minutes after Anadarko Petroleum Corp said it agreed to acquire Kerr-McGee Corp and Western Gas Resources Inc in separate cash deals totalling $21.1 billion. On Thursday, oil products marketer and pipeline operator TransMontaigne Inc agreed to sell itself to Morgan Stanley for about $634 million in cash.
Stone Energy terminated a prior merger agreement with Plains Exploration & Production Co on June 22, the companies said. EPL paid the $43.5 million break-up fee linked to that termination. The merged company, which will keep EPL's name, should generate significant cash flow, the companies said. EPL hopes to reduce its debt to 50 percent of book capitalisation by the end of 2008. EPL will be headed by Richard Bachmann, EPL's current chairman and chief executive, and have headquarters in New Orleans.