Sabine Oil & Gas Merger with Forest Oil Corporation

May 15, 2014 Kirk Eggleston

Forest Oil Eagle Ford Acreage Map Year-end 2013

Houston-based Sabine Oil and Gas and Denver-based Forest Oil Corp will merge in an all-stock transaction.

At closing, which is expected some time during the fourth quarter, Sabine investors will hold 73.5% of the combined company's stock. The announcement of the merger was revealed by both companies in early May of 2014.

The combined company, which is expected to be listed on the NYSE as "SABO", will hold a 207,000 net acreage position in East Texas, and a 65,000 net acreage position in the Eagle Ford. Estimated proved reserves from the combined company's assets are 1.5 trillion cubic feet equivalent (71% gas) (as of December 31, 2013), and estimated daily production of 345 million cubic feet equivalent (65% gas) for 2014.

Forest Oil Was in Trouble

The merger comes on the heels of multiple asset divestitures by Forest over the past several years. In early January of 2013, the company sold some of its South Texas assets to pay down debt.

Recently, Forest Oil hit a snag in the Eagle Ford during the fourth quarter of 2013, after three gross (1.5 net) wells hit a fault line in the company’s southern acreage. 77% of the company’s $290-310 million capital budget was slated for the Eagle Ford in 2014, but new estimates were set at 36% after problems arose.

The new company's headquarters will be based in Houston, TX, and led by Sabine's current executive management. Prior to the merger, Sabine Oil and Gas was a privately held company.