Surge Energy has agreed to acquire its rival Canadian oil and gas company Mount Bastion Oil and Gas (MBOG) for C$320m ($243.62m).
Image: Surge Energy to buy Alberta-based Mount Bastion Oil and Gas for $243m. Photo: courtesy of Stuart Miles/Freedigitalphotos.net.
The Calgary-based Surge Energy said that the acquisition will add more than 600 million barrels of net internally estimated light original oil in place along with concentrated reserves, production, acreage and operations.
Further, the assets of MBOG will give a 12% increase to the company’s operating netback per barrel of oil equivalent (boe). The transaction is also expected to add more than C$85m ($64.71) of net operating income for Surge Energy in 2019 and boost its overall production to 22,500boepd.
The Alberta-based MBOG has an operated light oil production of 5,500boepd from the structural reef complexes within the geological Beaverhill Lake Group. The company’s assets are located near Surge Energy’s core, waterflooded, light oil pools at Nipisi and Nipisi South in the western Alberta region.
With the addition of MBOG assets, Surge Energy will be able to increase its oil and liquids weighting by 4% to 85%, while its light oil weighting will move up to 55%.
Surge Energy, in a statement, said: “Surge anticipates increasing its dividend by 25 percent, from $0.10 per share annually ($0.00833 per month) to $0.125 per share annually ($0.0104 per month), while improving Surge’s all-in payout ratio from 89 percent to 87 percent.”
Recently, the company acquired a high netback, waterflooded, crude oil producing assets in its core Sparky area of Central Alberta for C$28.4m ($21.62m) from an undisclosed seller. The acquired asset at the time of signing the deal in May 2018 had a production of 620boepd of which 83% was oil.
The transaction followed the three separate acquisitions made by Surge Energy in the Sparky area, adding more than 2,200boepd in total. Included in these is a C$37.2m ($28.32m) acquisition made in October 2017 of a low decline, high netback, waterflooded, crude oil producing asset with a production of over 780boepd.