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GeoResources To Merge Into Halcón Resources In $1 Bln Cash, Stock Deal

4/25/2012 10:11 AM ET

Independent oil and gas company GeoResources, Inc. (GEOI: Quote) agreed Wednesday to merge into its wholly-owned subsidiary of Halcon Resources Corp. (HK: Quote) in a cash and stock deal valued at $1.0 billion. The deal, which has the unanimous approval of both the companies boards, is expected to close in the third quarter of 2012.

Meanwhile, the deal is subject to the approval of the stockholders of both companies, as well as other customary approvals, including approval of listing of the Halcon Resources shares that will be issued in the merger on the New York Stock Exchange.

"This transaction represents a significant opportunity for the shareholders of both companies to benefit from the combined strengths of Halcon Resources and GeoResources and is immediately accretive to discretionary cash flow, production and reserves on a per share basis," Halcon Chairman, President and CEO Floyd Wilson said in a statement.

The combined entity will become a resource powerhouse with exposure to some of the most prolific unconventional liquids plays in the U.S.

The deal will see Halcon increase its estimated proved reserves by more than 150 percent to about 52.8 million barrels of oil equivalent or boe. It will also boost Halcon's average net daily production by more than 170 percent to about 11,070 boe.

Under the deal, GeoResources stockholders will receive $20.00 in cash and 1.932 shares of Halcon Resources common stock for each share of GeoResources common stock that they hold. This will imply a total consideration of $37.97 per share, representing a 23 percent premium to Halcon's closing price of $30.77 on Tuesday.

Following the announcement, GeoResources shares are surging $5.54 or 18.00 percent to $36.31 in a bid to reach the offer price. Halcon shares are also up $0.73 or 7.85 percent at $10.03.

Frank Lodzinski, Chairman, President and CEO of GeoResources stated, "We are excited about the opportunity to partner with a company that is well positioned to become a leading liquids-focused resource player.

Following the closure of the deal, Halcon will continue to be led by Wilson, and Halcon's Executive Vice President, CFO and Treasurer Mark Mize. At that time, the GeoResources stockholders are expected to own about 18 percent of the combined entity.

"This transaction provides our shareholders with a combination of near-term liquidity and significant exposure to future upside. We believe our shareholders, employees and other stakeholders will prosper under the Halcon Resources banner and we are excited to move forward." Lodzinski added.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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