Voyager Oil & Gas (NYSEAMEX: VOG) plans to acquire Emerald Oil, a subsidiary of Emerald Oil & Gas (ASX: EMR), in a securities purchase deal.
The acquisition will create an oil and gas concern headquartered in Denver, Colorado and focused upon the oil and natural gas resources of the Rocky Mountains, combining assets from both companies in the Williston Basin with Emerald Oil’s acreage in the Sandwash Basin.
The Williston Basin includes assets in the Bakken and Three Forks oil sites, two major oil-producing shale deposits, and this deal expands the two companies’ presence in that region.
Management will remain roughly the same, with individual responsibilities re-delegated for the purpose of the new company.
“The untapped oil and gas reserves in the Western United States have reshaped the North American energy markets,” said McAndrew Rudisill, President of Emerald Oil. “The combination of Voyager and Emerald Oil underscores our commitment to developing an operated U.S. shale oil company. Today’s announcement accelerates our strategy of using our position in the Williston Basin to create a company focused on Bakken and Three Forks development, two of the most prolific and extensive shale oil plays in the U.S.”
The newly-formed company, which will function as Emerald Oil, hopes to develop its first operating well in North Dakota in early 2013.
Once the deal is complete, Emerald Oil will control roughly 43,500 acres in the Williston Basin region. It will also control another 45,000 acres in the Sandwash Basin shale oil site, as well as 33,000 acres in the Heath shale deposits in Montana, 74,700 acres in the Tiger Ridge gas plays in Montana, and 2,400 acres in Denver’s DJ Basin Niobrara.
The new management team will be headed by J. R. Reger (current CEO of Voyager) as Executive Chairman and Mike Krzus (current Director and CEO of Emerald) as Director and CEO of the combined company. McAndrew Rudisill will serve as President, and Paul Wiesner will be CFO.
The deal terms clarify that Voyager will acquire 100 percent of Emerald’s outstanding equity interests. Emerald, in turn, will receive up to 19.9 percent of Voyager common stock and roughly $19 million of Emerald’s outstanding debt.
Voyager’s current shareholders will end up with around 80 percent of the combined company, and Emerald will hold the remaining 20 percent.