Sabine Oil & Gas is planning to merge with Forest Oil Corporation. The expected close date of the merger is in September/October 2014, and there are certain conditions that need to be met, such as financing in place, regulatory approval, and a 2/3 vote from Forest Oil shareholders.
The pro forma asset profile of the combined entity suggests that Sabine plans to reduce leverage from 4.6x to 3.3x through a combination of divestitures and production growth. They also aim to refinance existing debt and issue additional debt to complete the merger. This is expected to make the combined entity more attractive to investors, with a projected stock price of 23, a market cap of 1.0B, an improving balance sheet, and strong production growth.
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