Forestar Group Inc. (NYSE: FOR) today announced the completion of its acquisition of CREDO Petroleum Corporation (“Credo”) for approximately $146 million in cash, excluding closing costs. The company funded the purchase with borrowings under its senior credit facility and available cash.
“We are confident this strategic transaction will generate solid returns and accelerate the value to be realized from our oil and gas assets,” said Jim DeCosmo, president and chief executive officer of Forestar. “The acquisition of Credo is expected to double production and reserves, provide meaningful ownership in strategic oil and gas basins and further enhance our transparency and disclosure. In addition, we expect the acquisition to be accretive to earnings in 2013, create a meaningful oil and gas platform and further enhance shareholder value going forward.”
Credo is an oil and gas exploration, development and production company based in Denver, Colorado which owns leasehold interests in over 135,000 net mineral acres. Formations include the Bakken and Three Forks of North Dakota, Lansing – Kansas City in Kansas and Nebraska, and Tonkawa and Cleveland in the Texas Panhandle. Credo owns working interests in approximately 380 producing wells and overriding royalty interests in approximately 1,200 wells.
“Credo is in the early stages of development relative to its position in the prolific Bakken and Three Forks formations. We are just now beginning to see production growth as oil was up over 90% in fiscal third quarter 2012 compared with third quarter 2011. Going forward, we expect significant production and reserve growth in the Bakken and Three Forks as well as a meaningful contribution from exploration and drilling activity in Kansas, Nebraska and Texas. Following this transaction, Forestar has a solid balance sheet with over $160 million in available liquidity, and is well positioned to accelerate value realization, capitalize on growth opportunities and grow net asset value,” concluded Mr. DeCosmo.