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Forestar To Acquire Credo Petroleum

Forestar Group Inc. (NYSE: FOR) today announced the signing of a definitive agreement to acquire CREDO Petroleum Corporation (NASDAQ: CRED) in an all cash transaction for $14.50 per share, representing an equity purchase price of approximately $146 million. The agreement has been approved by each company’s Board of Directors.

“This strategic acquisition is consistent with our recently announced Triple in FOR initiatives to accelerate value realization, optimize transparency and disclosure and raise net asset value through strategic and disciplined investments,” said Jim DeCosmo, president and chief executive officer of Forestar. “This acquisition is expected to more than double Forestar’s existing oil and gas production and proven reserves, provide Forestar with operating flexibility, and create a solid platform for continued growth.”

Following closing of the proposed transaction, Forestar will have meaningful ownership and operations in several strategic oil and gas formations including the Bakken and Three Forks, increased exposure to oil, and additional transparency and disclosure benefits.

Key highlights of the acquisition include:

  • Securing mineral leasehold interests in approximately 125,000 net mineral acres, including approximately 6,000 net mineral acres comprising about 50 units in the core of the Bakken and Three Forks formations
  • Increasing Forestar’s reserves by over 135% to 7.1 million BOE (barrels of oil equivalent) based upon year-end 2011 reserves, with oil representing 43% of total combined reserves (on a BOE basis)
  • Increasing Forestar’s annual production to over 723,000 BOE (41% oil) based on full year 2011 results

“Our oil and gas strategic initiatives have been principally focused on growing production and reserves by accelerating the marketing of our minerals, promoting exploration and drilling activity, and participating in lower-risk working interest investments,” said Mr. DeCosmo. “Following the acquisition of Credo, we will have the scale and option to operate and capitalize on attractive oil and gas investment opportunities. This important milestone will allow us to leverage the newly acquired leasehold interests as well as our existing mineral rights to recognize and responsibly deliver the greatest value from every acre.

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