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Gas industry

Kelley Oil and Kelley Oil & Gas Partners Consider Consolidation into New Corporation

Strategic Insights

— 1 min read

Kelley Oil and Kelley Oil & Gas Partners Ltd. are considering consolidating into a new company, Kelley Oil & Gas Corp., with the aim of simplifying their organizational structure and increasing financial strength. The proposed merger, which could be completed by the end of the year, would see all publicly held units in Kelley Partners exchanged for common stock and mandatory convertible preferred stock in the new company, while all common stock in Kelley Oil would be exchanged for common stock in Kelley Oil & Gas Corp. The consolidation is expected to save Kelley Oil & Gas Partners around $10 million in distribution costs.

Key Takeaways:

  • The proposed consolidation aims to simplify Kelley Oil and Kelley Oil & Gas Partners' organizational structure and increase financial strength by creating a larger, more capitalized enterprise.
  • The transaction would exchange all publicly held units in Kelley Partners for common stock and mandatory convertible preferred stock in the new company, while exchanging all common stock in Kelley Oil for common stock in Kelley Oil & Gas Corp.
  • The consolidation is expected to save Kelley Oil & Gas Partners around $10 million in distribution costs, which would otherwise be paid to investors.
  • Analyst David Garcia from Principal/Eppler Guerin & Turner views the consolidation as a structural reorganization with no operational changes, as the same personnel will continue to be involved in drilling activities.
  • The committee considering the proposal may negotiate revisions before making a final judgment on its fairness to shareholders.

Statistics:

  • Kelley Oil owns 13.5% of Kelley Partners.
  • The consolidation is expected to save Kelley Oil & Gas Partners around $10 million in distribution costs.
  • The proposed consolidation aims to create a new company, Kelley Oil & Gas Corp.

Sources:

  • A company spokeswoman
  • David L. Kelley, Chairman and CEO of Kelley Oil
  • David Garcia, Analyst at Principal/Eppler Guerin & Turner

Note: Sources are listed exactly as mentioned in the original text, and no dates or details have been added.

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