Houston-based Plains Exploration & Production Co. announced Monday that it has agreed to acquire Stone Energy Corp. of Lafayette, La. and assume the company’s debt in a stock deal with a current value of about $1.35 billion.
Under the agreement, Plains will swap 1.25 common shares for each Stone Energy common share as Plains expects to issue about 34.5 million shares and assume about $485 million in debt. When the acquisition closes, Plains shareholders will own 70% of the combined company with Stone Energy shareholders owning the balance. Stone Energy shares rose $1.76 to $48.86, while Plains stock declined $2.92 (7%) to $39.05 as of the end of yesterday afternoon’s New York Stock Exchange composite trading.
The primary purpose of the acquisition is to diversify Plains heavy concentration of reserves in California into Louisiana and the Gulf Coast. After the acquisition closes, Plains will have a proved reserve base of about 500 million barrels of oil equivalent (about 80% in oil) with operations in California, the Rocky Mountain region, Texas and the Gulf of Mexico.