Midstates Petroleum has proposed to acquire rival oil and gas firm SandRidge Energy in an all-stock transaction to create a major exploration and production player in the Mississippian Lime formation in the US.

As per the terms of the offer, SandRidge shareholders would own about 60% of the combined company, while Midstates shareholders will own the remaining 40%.

Midstates said that SandRidge shareholders would get 1.068 Midstates shares in exchange to each existing SandRidge share.

It believes that the merger would result in significant benefits to shareholders on either side which otherwise wouldn’t be available through the standalone operations of the two firms.

Midstates said that the combined company will be boosted with highly complementary assets located in the Mississippian Lime and NW Stack.

It further added that its combination with SandRidge will give control over 450,000 net acres in the core of the Mississippian Lime play and result in a production of more than 53,000 barrels of oil equivalent per day.

In the NW Stack play, which is currently being delineated, the combined company will own 75,000 net acres, said Midstates.

Midstates president and CEO David J. Sambrooks said: “Combining these two businesses in an at-market merger would bring undeniable benefits to shareholders of both companies.

“The strategic fit and geographic overlap of both companies’ assets in the Miss Lime and NW STACK builds critical mass, creates significant synergies, and generates superior, risk-adjusted returns.”

The company claimed that the proposed merger has the backing of Fir Tree Partners, which is a common investor in both Midstates and SandRidge.

Midstates said that it will work towards closing the transaction as early as the second quarter of 2018.

In late December 2017, SandRidge had to scrap its $746m acquisition offer to rival Bonanza Creek after failing to get the necessary support from its shareholders.