Dec. 1--SandRidge Energy Inc. is stepping up its acquisition efforts after a failed bid to buy a bankrupt oil and gas company.

Oklahoma City-based SandRidge announced Monday it will pay $800 million to acquire properties in Texas' Permian Basin from Forest Oil Corp. The company will sell preferred and common stock to help finance the deal.

The bulk of the purchase price is attributable to proved reserves estimated at 80 million barrels of oil equivalent. Nearly two-thirds of those reserves are oil and natural gas liquids, the company said.

"This acquisition will add over 1,500 locations for future development and we basically paid only for the proved developed reserves," said Tom Ward, SahndRidge chairman and CEO.

Ward said the deal will allow SandRidge to keep working in familiar territory.

"While we do believe there are new areas that can produce attractive amounts of natural gas and oil, the entry cost is expensive and it's a big bet on the unknown," he said in a conference call. "We believe that staying with the strategy of accumulating and developing low-risk conventional oil and gas assets and drilling low-cost vertical wells will yield long-term profitability and superior rates of return for our company, if we chose those assets wisely."

Expected increase Ward called the new acquisition a "package of quality oil properties for the equivalent of the price of the proved developed reserves and obtaining the undeveloped, probable and possible upside for a nominal amount."

Ward said the acquisition of conventional Permian Basin assets would increase SandRidge's ability to produce oil and natural gas from its core West Texas properties.

SandRidge officials expect to expand the company's Clear Fork operations in the Central Basin Platform.

Production in that area has risen 400 percent in the past two years, running an average of one and a half drilling rigs.

"This play currently generates the company's highest returns on invested capital, thanks to strong oil prices and low drilling costs," Ward said. "We are planning to increase the number of rigs we have drilling in our Clear Fork development program to six in 2010."

The deal was announced less than three weeks after SandRidge abandoned plans to buy debt-ridden Crusader Energy Group Inc. for $230 million. Oklahoma City-based Crusader was purchased at auction Nov. 13 by Austin-based Jones Energy for $289 million.

SandRidge will sell 2 million shares of preferred stock for $200 million to fund the new deal, the company announced Monday.

The company also will sell 22 million shares of its common stock. Ward is offering 2 million shares.

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