Canadian petroleum and natural gas firm Trilogy Energy has agreed to merge with rival Paramount Resources in a share exchange deal.

Under the terms, the Canadian petroleum company Paramount will acquire 100% of the shares of Trilogy, offering one Paramount share for every 3.75 Trilogy shares.

Separately, Paramount has signed an agreement to acquire Apache Canada for $459.5m from Apache.

As per the terms, Trilogy’s merger will go through only if Paramount completes the acquisition of Apache Canada along with other conditions.

On acquiring Apache Canada and merging with Trilogy, Paramount will become an intermediate exploration and production company with focus on Montney, Duvernay and Deep Basin. It will gain the financial strength needed to advance the development of a portfolio of top-tier resource plays and will also be in a position to take advantage of the value of the underlying resources.

The combined entity is estimated to have a fourth quarter 2017 production of over 90,000Boe/d. It is also expected to create operational synergies, streamline cost structures, provide financial flexibility and bring about economies of scale.

According to Paramount president and CEO Jim Riddell, the transactions reflect the company’s next significant resource capture which consolidates on the transformation strategy initiated last year.

Riddell added: “We have replaced more than the liquids-rich Montney lands and reserves we sold in 2016 and acquired a suite of top-tier development opportunities.

“We believe the 46,000 Montney acres we are acquiring at Wapiti are a continuation of Paramount's liquids-rich resource play at Karr, where our drilling and completion programs have been delivering record results for Paramount.”

The Paramount-Trilogy merger will be completed following shareholder and court approvals that include the minority shareholder approval by the shareholders of both Trilogy and Paramount.

Upon receiving all approval and meeting all conditions, the merger is anticipated to be completed in September. On the other hand, the Apache Canada acquisition will be independent of the Trilogy transaction and is likely to be closed in August.