After much prodding from dissatisfied investors, oil and natural gas player Pogo Producing (NYSE:PPP) is bouncing into the arms of an acquirer. Plains Exploration & Production (NYSE:PXP) has agreed to buy the firm for about $3.6 billion in cash and stock. But this Pogo ride wasn't nearly as fun for investors as the name would imply.

Pogo first drew the ire of activist investor Dan Loeb of Third Point late last year. In his first missive to the company, Loeb pointed to the ill-conceived acquisition of Northrock Resources from Chevron (NYSE:CVX) subsidiary Unocal in 2005. That was a major purchase for the company, and the production declines there, despite major capital expenditures, reflect a capital allocation failure. Loeb demanded a sale of the company.

Third Avenue Management, a Foolish favorite, typically acts as a passive investor. But it, too, became fed up with Pogo management. In an even more scathing review, portfolio manager Curtis Jensen pointed to Pogo's deteriorating financial position, falling production, and ballooning costs. He also singled out the CEO's extremely generous compensation package, which was inexplicably rising as the company floundered. Jensen more subtly called for a "change in direction" but clearly laid the blame at management's feet.

To avoid a proxy contest with Third Point, Pogo admitted Loeb plus one to the Board and began divesting assets. The Northrock properties were dumped with minor fanfare, although Abu Dhabi's state oil company paid roughly the same amount Pogo spent on the acquisition and development of the assets.

Pogo had stated as early as February that it was considering a sale or merger of the company, so this week's news didn't catch anyone off guard. Shareholders get a modest premium in the deal, and they get a chance to redeploy their capital into companies that have a better record of rewarding shareholders. Chesapeake Energy (NYSE:CHK) and XTO Energy (NYSE:XTO) are two of the strongest I know of among the larger independents, but there are a lot of small E&P companies worth exploring as well.

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Fool contributor Toby Shute doesn't own shares in any company mentioned. The Motley Fool's disclosure policy puts the bounce in our step.