4 Things to Know as EOG Resources Merges With Yates Petroleum in $2.5 Billion Deal

EOG Resources Inc. (EOG) will merge with Yates Petroleum Corporation in a $2.5 billion deal. Yates, a privately-held entity, also includes MYCO Industries and Abo Petroleum, which are all under the Yates umbrella.

The announcement from Yates sheds light on the deal.

1.     EOG Will Issue $2.3 Billion in Stock

Under the terms of the deal, EOG will issue $2.3 billion shares of stock to Yates. The company will also pay $37 million in cash. The subject of both of these figures may change based on closing adjustments.

2.     EOG Averages 551 Thousand Barrels a Day

EOG nets 551,000 barrels of crude oil per day and is the largest oil producer in the Lower 48. The company will work with Yates and greatly extend their reach, as Yates produces 29,600 barrels of oil per day.

3.     EOG Stock Soared 6.6% on the News

EOG stock rose 6.6% on Tuesday following the rumors of the deal. The company posted revenue of $8.75 billion in 2015 and is based in Houston, Texas. The company’s stock is up over 10% in the last 90-day period and 21% over the past 12-month period.

4.     The Deal Took Months to Close

EOG will acquire acreage in one of the most cost-effective oil fields in the country: the Permian Basin. The deal was in the negotiation stages for months before an agreement was finally made.

The Permian Basin is the country’s most active oil field, with 189 of 481 active oil rigs in the country operating in the field.

EOG asserts that the deal is not an attempt to expand the company. “We’ll be able to grow oil with less capital and more efficiently than we do now,” states Bill Thomas, Chief Executive of EOG.

The deal is expected to close in October. The company will begin drilling on its newly acquired land immediately following the deal’s closure.

The following two tabs change content below.

Daniel Simmons