Edge Petroleum to Buy Miller Exploration in Stock Swap
Thursday May 29, 9:07 am ET
HOUSTON (Dow Jones)--Edge Petroleum Corp. agreed to acquire Miller Exploration Co. (NasdaqSC:MEXP - News) in a stock swap valued at $12.7 million.
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Edge said in a press release Thursday that the proposed deal would boost its proved reserves and production by about 10% and allow the companies to capitalize on complementary producing assets in the Gulf Coast region and complementary undeveloped assets in the Northern Rocky Mountains area.
Miller's exploration efforts are centered mainly in the Mississippi Salt Basin of central Mississippi. At the end of 2002, the Traverse City, Mich., company had net proved reserves of 6.8 billion cubic feet and produced about 6.7 million cubic feet a day. Edge said Miller had about 103,000 undeveloped acres at the end of 2002, including a large undeveloped tract in northern Montana.
Assuming the deal is completed Aug. 1 as planned, Edge's estimated production will increase to between 8.8 billion cubic feet and 9 billion cubic feet for the year.
Based on Edge's closing price Tuesday, Miller shareholders would get about 2.54 million Edge shares. Edge expects that it will have about 12.04 million shares outstanding once the deal closes.
Edge said the acquisition, which must win shareholder approval and meet other customary closing conditions, won't likely add to its work force or affect the composition of its board. The company expects the deal will be nontaxable to both sides.
Edge expects the deal to increase earnings, cash flow, borrowing capacity and its financial flexibility. The company said the improvement will allow it to accelerate its planned 2003 capital program.
The number of Edge shares to be issued to Miller shareholders will be based on the average closing price of Edge's stock for the 20 trading days ending five days before the Miller shareholder vote. The proposed deal stipulates a maximum value of $5 an Edge share and a minimum of $4.70 per Edge share.
Miller directors and key shareholders, who together control 50.6% of the company's outstanding shares, agreed to vote for the deal. If Miller's board were to withdraw its support of the deal, Edge would need to win approval from only 32.7% of Miller's outstanding shares.
Miller has also agreed to sell its Alabama properties to an unrelated private party. At the end of 2002, the land had proved reserves of 700 million cubic feet. Edge said the sale will leave Miller with proved reserves of about 4.6 billion cubic feet, no debt and working capital of more than $3 million.
In the Edge press release, Miller confirmed a Wednesday statement from Calgary-based K2 Energy Corp. announcing an agreement to drop litigation against each other regarding the Blackfeet Indian Reservation in Glacier County, Mont.
Miller shares ended Wednesday at $4.30, off 10 cents, or 2.3%, in Nasdaq trading. Shares of Edge Petroleum closed Wednesday at $5.63, down 15 cents, or 2.6%. |
