Riata Energy already expanding, buys Texas company

Weeks after completing the move of 65 corporate employees to a northwest side tower in OKC, Riata Energy is already buying companies and doubling in size. This could potentially add 70 new employees to the Oklahoma City office.

And finally, we're stealing oil companies from Texas!

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OKC’s Riata Energy, Dallas’ NEG Oil and Gas enter $1.5 billion agreement

9/7/2006

Newly Oklahoma City-located Riata Energy Inc. announced Sept. 7 that it has entered a letter of intent and agreement to obtain an option to acquire Dallas-based NEG Oil and Gas LLC, a subsidiary of American Real Estate Partners LP, according to a joint statement released by the companies.
The letter of intent indicates the acquisition’s aggregate consideration would be $1.5 billion; Riata would issue 12.8 shares of its common stock at $19 per share. The balance of the consideration -- $1.025 billion -- would be payable in cash, of which $10 million was paid to AREP prior to the announcement. Additionally, Riata would assume up to $300 million of NEG Oil and Gas’ debt and $50 million.

Former Chesapeake Energy co-founder Tom Ward serves as chairman and CEO of Riata Energy which was located in Amarillo until July. Ward became Riata’s largest shareholder in May after retiring from Chesapeake in February. Riata’s agreement brings back Alexander Energy Corporation's Bob Alexander to Oklahoma City; NEG Oil and Gas was the successor company to Alexander which left Oklahoma in 1996.

“This transaction continues to focus Riata on our largest asset, the West Texas Overthrust Belt. With the consummation of the NEG acquisition, as well as six other property acquisitions since May 1, we would have over 83 percent working interest in the Pinon Field and over 260,000 net acres of land in the West Texas Overthrust Belt,” said Ward in the official statement. “We project that, if we close this acquisition, by the end of this year our production should increase by five fold and would plan to implement a 20-rig drilling program in Pinon Field by 2007.”

Ward also indicated that acquisition would stretch Riata’s core area of operations to include East Texas, the Gulf Coast and the Gulf of Mexico. Riata’s principally focuses on exploration and production, and it has assembled a large acreage position in West Texas. NEG Oil and Gas’ core areas of operation are the Val Verde and Permian Basins of West Texas, the Cotton Valley Trend in East Texas, the Gulf Coast and the Gulf of Mexico. It also owns properties in the Anadarko and Arkoma Basins of Oklahoma and Arkansas.

“AREP’s investment in NEG Oil and Gas has proven to be tremendously successful,” said Carl Icahn, AREP chairman in the prepared statement. “I commend Bob Alexander and his team for their efforts in building a great company. We believe that by combining these assets with Riata they will be positioned to grow to the next level.”

The agreement would expire in 70 days, subject to extension in certain circumstances. The transaction would include acquiring all of the issues and outstanding membership interests of NEG Holding LLC held by National Energy Group Inc., which are to be acquired by NEG Oil and Gas in a restructuring transaction to occur simultaneously with the closing of the transactions contemplated by the letter of intent. The transaction would not include acquiring any equity ownership of National Energy Group Inc.

So do they have room in their current location for these employees? I don't remember where they moved to the NW side to.

So the obvious question, if they dont have room, will they take over Kerr McGee's offices?

No. Kerr McGee's offices are in such demand that I believe there is a lot of interest in taking it once Kerr McGee is moved out of town.

Besides, Tom Ward is a campus man, coming from Chesapeake. He'll want to start up a brand-new campus headquarters and establish the company there, and grow the campus until he has to grow it vertically. I would like to see this campus occur in the Riverside neighborhood, and it would be an excellant catalyst for development down there once I 40 is moved.

I've also heard rumours that he may also want to give OKC a new tower, but it doesn't seem as likely as a new campus. Tom Ward also has a very chic sense of style, and wouldn't want a campus out on Memorial Road or the West Outter Loop, I think he would rather go for an area like Nichols Hills, Edmond, downtown, or the inner north side.

This will make for really good development either way.

That would involve the use of taking land (that has been owned by families down there for over a century) and demolishing everything on it.

Which is evil as we've been told time after time.

If those families were so concerned about that land, why is that area a slum? And also, all of that land will be redeveloped once I 40 is finished in 2009 anyway.

Is this supposed to re-enact or replace the good thread you all used to have on the old forum about Riata possibly building a new campus?

Haha, re-discuss I suppose.

I'll continue my train of thought that Ward has learned the drawbacks to the campus system by saying that at least he has learned the drawbacks to attempting to build a campus in a well-established, developed area. If he is to build a campus for Riata, he'll build in an undeveloped area- which he might find convenient considering he lives in the rural northwest side. Riata is nowhere near the size needed for a campus though. This will give them maybe 150 employees. They've already started looking for a new home- hopefully downtown will present a good opportunity for them when they are squeezed out of the cramped northwest side market.

We have to do something to make downtown desirable for companies looking for Class A space at a rate cheaper than it would cost for them to build or rent in rural areas. First National renvoations ASAP would be nice.