Hammerhead Resources, a Canadian oil and gas producer focused on the Montney play in Alberta, has secured an equity commitment of up to C$300m ($230.25m) led by affiliates of global private investment firm Riverstone.
Through the new equity investment, priced at C$3.00 ($2.30) per share, Riverstone has raised its stake further in Hammerhead Resources, which was rebranded from Canadian International Oil (CIOC) in July 2017.
Riverstone partner & managing director Robert Tichio said: “Since our initial investment in 2014, we viewed this asset as unique in our investment program, given the size of the acreage position and the compelling economics of the Company’s drilling inventory.”
Hammerhead Resources expects the new capital to give it financial flexibility to continue with its organic growth program across its resource base. The company boasts of a contiguous land base in two resource plays in North America, with more than 200,000 net acres in each of the Montney and Duvernay formations.
The Canadian oil and gas producer’s development so far has been focused on the Upper/Middle Montney. Its current production is more than 28,000boe/day while the annual production is anticipated to average more than 27,000boe/day in 2018.
The company said that the new equity commitment confirms the prospectivity of its asset base, which it says has been backed by the drilling results.
Hammerhead Resources CEO Scott Sobie said: “This equity injection provides us with the capital to continue on a path of peer-leading growth, while maintaining capital discipline and a strong balance sheet.
“The continued support from Riverstone and other major shareholders re-affirms the strength of our relationship as well as their confidence in the quality of our assets and management team.”
Hammerhead Resources expects to focus its development work mainly in the Gold Creek and Karr areas where it will use multi-well pads in areas of existing infrastructure along with implementation of completion technologies.
The equity commitment and other aspects will be based on negotiation and signing of definitive agreements and also the final approval of the board of directors of Hammerhead Resources and meeting of customary closing conditions.