5 April 2010 – Lawfuel.com – Covington & Burling and the Tulsa, Okla., firm Johnson & Jones took the lead on SandRidge Energy’s $1.55 billion acquisition of rival oil and natural gas explorer Arena Resources, the latest in a string of consolidations in the red-hot energy sector, according to lawyers on the deal.
For Covington, the deal is proof that the firm’s long presence in Oklahoma City–where SandRidge is based–continues to pay dividends, says Scott Smith, who led the deal for Covington along with fellow corporate partner Stephen Infante.
Smith, himself an Oklahoma native, says Covington nailed down the SandRidge work last July, in part because of the firm’s foothold in Oklahoma City. Covington served as longtime corporate counsel for Kerr-McGee Corp., an Oklahoma City-based company that was once one of the largest oil and gas explorers in the U.S. before it was acquired in 2006 by Anadarko Petroleum Corp. for $18 billion, according to our archives. Covington advised Kerr-McGee on that deal, and Smith says that experience helped Covington win the SandRidge work in July, shortly after the firm sent a team to SandRidge to woo the company.
The bulk of Covington’s work in the Arena deal took place months ago, when the firm advised on three equity and debt offerings aimed at bolstering SandRidge’s capital in preparation for the Arena offer, Smith says.
SandRidge will obviously continue to exist after the the deal closes, but Arena will not, and Arena’s management team will not play a role at SandRidge going forward, according to Reuters and Ken Dornblaser, the lead Johnson & Jones partner who advised Arena.
Johnson & Jones, which spun off from a larger Tulsa firm in 1994, won a beauty contest for Arena’s corporate work in 2004, Dornblaser says. “We are very sorry to lose them,” Dornblaser says of Arena, adding that he doubts Johnson & Jones will do any work for SandRidge going forward.
Arena reached out to Dornblaser in early March to help the company respond to SandRidge’s pursuit, Dornblaser says. While Covington had completed its most crucial deal work by the end of the fall, Dornblaser says the last month has been extremely busy for the Johnson & Jones team. He credits Covington and SandRidge for approaching Arena with an initial offer he calls “very fair,” and says SandRidge must pay Arena a $50 million breakup fee, if it backs out of the deal. Both companies agreed to pay the other a much smaller fee should their shareholders vote against the deal, Dornblaser says.
The Covington team also included securities partner David Engvall, benefits partner Michael Francese, and tax partner Rob Heller, the firm said.