Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Forest Oil Corporation (NYSE: FST) jumped as much as 37% today after announcing its merging with privately held Sabine Oil & Gas. Shares settled at a 19% gain midday.
So what: Once the merger is complete, Sabine will own approximately 73.5% of the new company and Forest shareholders will own the remaining 26.5%. The companies will own one of the largest stakes in East Texas and will have an estimated proved reserves of 1.5 trillion cubic feet equivalent of gas and daily production of 345 million cubic feet in 2014.
Now what: Forest Oil has been floundering since fall 2013 and this is essentially a lifeline for the company. The combination will allow the companies to expand and not drown under Forest Oil's $800 million in debt after disappointing drilling results. It'll take time for investors to see how the operations of Sabine look along with Forest Oil but this should stop the bleeding of shares for the time being.
