Alta Mesa Holdings LP, a privately held energy producer based in Houston, on Wednesday agreed to acquire Meridian Resource Corp. for $26.8 million in cash and assume all of the company’s outstanding debt, estimated at about $96 million.

Meridian, also based in Houston, explores for natural gas and oil along the Texas and Louisiana coasts. It also has development activities under way in the East Texas and South Texas Austin Chalk, and in Oklahoma and Kentucky. At year-end 2008 Meridian’s proved reserves were estimated at 80 Bcfe, 63% weighted to natural gas and 64% proved developed. In 3Q2009 Meridian’s production was about 32 MMcfe/d.

“Meridian’s board of directors seriously considered a wide range of potential alternatives, including an infusion of capital, continuing to operate as an independent entity, issuing additional equity in a public or private offering, the sale of certain assets and combinations with other merger partners,” said Meridian CEO Paul Ching. “After conducting an exhaustive evaluation of recapitalization and corporate sale alternatives, our board of directors unanimously concluded that this transaction with Alta Mesa is in the best interests of our shareholders.”

Meridian’s shares were trading at around 27 cents early Wednesday; a year ago the company was trading at around 65 cents/share. Alta Mesa’s bid would give Meridian’s stockholders 29 cents/share in cash.

In addition to paying $26.8 million in cash for the shares, Alta Mesa agreed to assume all of Meridian’s outstanding obligations, including those under its senior secured credit agreement, estimated at $89.5 million, and an equipment loan agreement of $6.5 million. The merger plan was unanimously approved by Meridian’s board of directors, and the board has recommended that the company’s shareholders vote in favor of the agreement. Meridian has received all necessary consents under its applicable loan agreements.

The transaction, if approved by Meridian’s stockholders, is slated to close in the first half of 2010.

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