Cash-strapped onshore operator SandRidge Energy Inc. late Monday rejected an unsolicitedmerger with Midstates Petroleum Co. Inc., but the Oklahoma City-based independent said it might consider another bid by the spurned suitor or pursue other options.

The SandRidge board said it had turned down the offer to combine in a stock-for-stock transaction “after careful consideration and a detailed technical and financial review.”

“In light of ongoing feedback from shareholders and several expressions of interest we have recently received, we have decided to engage advisers to solicit third-party proposals and assist in evaluating all strategic options available to the company,” said CEO Bill Griffin.

Griffin, formerly an independent board member, was appointed last month after the board ousted CEO James Bennett and CFO Julian Bott only days after Midstates made its bid.

Following an “extensive analysis,” the SandRidge board has concluded that the relative asset values of the two companies based on Midstates’ offer did not support the combination at current stock prices.

“The decision was primarily based on significantly differing opinions of Midstates’ proven oil and gas reserves, largely related to the assessment of the number of economically viable drilling locations at current oil and gas prices,” Management said.

However, SandRidge acknowledged that the combination “would likely result in meaningful synergies,” as it could “efficiently absorb Midstates’ assets and operations with limited incremental expense.”

Tulsa-based Midstates’ merger estimates didn’t ring true to SandRidge management that the combined business plan would result in “generally flat production and free cash flow of $320-400 million, over the four year period from 2019-2022.

“For these and other reasons, SandRidge has concluded that accepting Midstates’ proposal would be highly dilutive and not in the best long-term interests of SandRidge stockholders.”

With Midstates’ offer in hand, SandRidge said it received “indications of interest regarding alternative transactions from other oil and gas companies.”

SandRidge has launched a formal process to evaluate strategic alternatives, which may include divesting or joint venturing, including the North Park assets in Colorado, along with “potential corporate and asset combination options with other Midcontinent operators, including Midstates, should it elect to participate in this competitive process.”

SandRidge plans to evaluate all third-party proposals and “pursue options which add incremental shareholder value relative to its continued standalone option.”
No timetable for its review was provided.

Most of SandRidge’s production is generated from the Mississippian Lime across 360,000 net acres in Oklahoma and Kansas. Development activity today is focused on the Meramec formation in in Oklahoma and across 125,000 net acres in the North Park Basin in the Niobrara.