(Adds details on deal, share move, analyst comment)
By John Benny and Anirban Paul
Nov 15 (Reuters) - Oil and gas producer SandRidge Energy said on Wednesday it would buy rival Bonanza Creek in a deal valued at $746 million to expand its presence in the Denver-Julesburg Basin of Colorado.
Shares of Bonanza Creek rose 3 percent to $31.65, but were trading well below the offer price of $36, suggesting investors were skeptical of the deal going through. SandRidge shares fell 16 percent.
"Its going to take a while before somebody can generate a lot of growth out of the Bonanza Creek assets," said Michael Scialla analyst at Stifel.
"They just came out of bankruptcy and were starting to ramp up (drilling operations)."
Bonanza, which emerged from bankruptcy earlier this year, reduced its full-year production forecast for 2017 by 4 percent after a string of quarterly revenue declines. SandRidge emerged from bankruptcy late last year.
The combined entity, SandRidge-Bonanza Creek, will operate over 630,000 net acres in the Rocky Mountains and Mid-Continent regions, producing about 55,000 barrels of oil equivalent per day, the two companies said.
SandRidge is based in Oklahoma and drills in the U.S. Mid-Continent and Niobrara Shale. Bonanza Creek also drills in the Niobrara Shale in Colorado, as well as in Arkansas.
SandRidge said the deal is expected to close in the first quarter of 2018 and will add to its cash flow from the start of the year.
Morgan Stanley & Co was the financial adviser to SandRidge and Vinson & Elkins LLP its legal adviser.
Evercore acted as financial adviser to Bonanza Creek and Kirkland and Ellis was its legal adviser. (Reporting by Anirban Paul in Bengaluru; Editing by Arun Koyyur and Anil D'Silva)