Armada Oil and Mesa Energy announced last week that the companies have entered into a non-binding letter of intent in order to pursue a business combination. The closing of the transaction is subject to further due diligence, negotiation and execution of definitive agreements, as well as necessary consents and approvals. The Board of Directors of both Armada Oil and Mesa Energy have unanimously approved the key terms of the proposed transaction and have authorized their respective management to pursue the transaction.Management of the companies believes that this contemplated transaction has several benefits:
- It would bring together a sound, proven management team with both operational and public company experience;
- Strong conventional, producing assets would provide cash flow and an underlying value to combined shareholders;
- A low-cost entry into the Niobrara play with multiple underlying conventional prospects would leverage the combined company to significant upside;
- The combined company would also have an attractive foothold in the Mississippi Lime play in Oklahoma; and
- The combined company would have critical mass to help raise capital efficiently, facilitate liquidity and spur rapid growth, thereby creating a solid platform to recognize value for shareholders.