As the price of brent crude oil soars, two petroleum companies have announced a “merger of equals.” The two companies, Oasis Petroleum (NASDAQ:OAS) and Whiting Petroleum (NYSE:WLL), announced that they would merge at a combined enterprise value of $6 billion. As a result, shares of both OAS and WLL stock are up higher by over 5% today.
Upon closing of the transaction, Whiting CEO Lynn Peterson will serve as the executive chairman of the board of the combined companies. In addition, Oasis CEO Danny Brown will take over as the CEO of the combined company and serve on the board as well. The combined company will take on a new name, although the name and new ticker symbol have not been disclosed yet. Furthermore, the new company is expected to trade on the Nasdaq exchange.
Kimmeridge Energy Management managing partner Mark Viviano believes the merger will provide synergies for both companies. The fund has a 4.9% stake in OAS stock. Viviano added that:
“We have advocated for industry consolidation as there are too many undersized and irrelevant companies drilling shale wells. This merger of equals amongst offsetting operators will help the combined company gain operational scale, with synergies accruing to both sets of shareholders.”
So, what else should you know about the Oasis-Whiting merger? Let’s dive right in.
OAS, WLL Stocks: What to Know About the Merger
- The merger is expected to close during the second half of this year.
- Upon closing, shareholders of WLL stock will receive 0.5774 shares of OAS stock and $6.25 in cash for each share of WLL stock that they own.
- Based on Friday’s closing price, WLL shareholders will receive about $89.68 for each share they own.
- For Oasis, shareholders of OAS stock will receive a special dividend of $15 per share upon closing.
- Oasis CEO Danny Brown believes that the merger will provide both companies with “complementary and high-quality assets.”
- These synergies will help drive “significant and resilient cash flow generation.”
- Whiting Petroleum filed for bankruptcy in 2020, the first oil company to do so during the coronavirus pandemic.
- The company emerged from bankruptcy after reducing its debt.
- In addition, Oasis Petroleum filed for bankruptcy in 2020 as well.
- Finally, the combined company will be based in Houston, Texas.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
