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Yuma Energy and Davis Petroleum announce merger agreement

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Oilfield Technology,

Yuma Energy Inc. and Davis Petroleum Acquisition Corp. have jointly announced that they have entered into a definitive merger agreement for an all-stock transaction. Upon completion of the transaction Davis will become a wholly owned subsidiary of Yuma. Presently, the transaction is subject to the approval of stockholders of both companies.

"We believe the combination of these two companies is a compelling value transaction for each company's owners and look forward to working with Davis and its Board of Directors to complete the merger," said Sam L. Banks, Chairman and Chief Executive Officer of Yuma. "This transaction truly represents a scenario where the whole is greater than the sum of its parts, and is anticipated to increase our proved reserves by approximately 4.8 million bbls of oil equivalent at year end 2015, and to substantially increase our net daily production by approximately 1500 bbls of oil equivalent per day based on Davis' fourth quarter 2015 production rates. Once the transaction is complete, Yuma expects significant G&A synergies associated with the merger and will be well positioned to take advantage of the collective portfolios of the combined companies, as well as to capitalise on the current environment, which we believe will provide opportunities to grow primarily through further consolidations and acquisitions."

"We are excited about the combination and the resulting synergies that this merger will bring, creating value for both companies. The Davis properties complement Yuma's existing portfolio from a geographic and strategic standpoint, while also strengthening its position in resource plays. We believe that Davis brings near term liquidity and long term optionality for the Pro Forma Company," said Michael Reddin, Chairman, President and Chief Executive Officer of Davis. "Our major stockholders are all committed to the deal, and look forward to becoming part of a larger, more diverse, publicly-traded enterprise."

Key attributes of Davis include:

  • No bank debt and approximately $4.1 million of cash as of December 31, 2015;
  • 1533 average boe/d of production for 4Q15;
  • 4.8 million boe of proved reserves (64% proved developed) as estimated by Netherland, Sewell & Associates, Inc. effective 31 December 2015.
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