The all-stock deal intends to create the fifth-largest liquids producer in Canada with an initial market capitalisation of nearly C$8.6bn ($6.3bn) and a current production of nearly 185,000boe/d, of which, oil/condensate makes up 70%
Pipestone Energy snapped up by Strathcona Resources in an all-stock deal. (Credit: Strathcona Resources Ltd.)
Strathcona Resources has wrapped up the previously announced acquisition of rival Canadian oil producer Pipestone Energy.
Announced in August 2023, the all-stock deal intends to create the fifth-largest liquids producer in Canada with an initial market capitalisation of nearly C$8.6bn ($6.3bn).
After including pro forma debt of nearly C$2.9bn ($2.1bn) at the time of the deal’s completion, the total enterprise value of the enlarged company will be around C$11.5bn ($8.4bn).
Structured via a plan of arrangement under the Business Corporations Act (Alberta), the deal involved Pipestone Energy’s shareholders exchange each of their shares in the company for 0.068 common shares of Strathcona Resources.
It was subject to Pipestone Energy’s shareholders’ approval, court approval, TSX approval, and other conditions.
Following the acquisition, Strathcona Resources, which was previously private-equity owned, will become a publicly traded reporting issuer on the Toronto Stock Exchange. The enlarged company will trade under the symbol SCR starting from this week, while Pipestone Energy’s shares will be delisted.
Pipestone Energy was formed in 2019 via the merger of privately-owned Pipestone Oil with Blackbird Energy. Its focus has been on oil and gas exploration and production, primarily on developing its condensate-rich Montney asset base in the Pipestone region near Grande Prairie, Alberta.
Strathcona Resources’ focus has been on thermal oil, enhanced oil recovery, and liquids-rich natural gas.
By adding Pipestone Energy, the current production of the enlarged Strathcona Resources increases to around 185,000 barrels of oil equivalent per day (boe/d), of which, oil/condensate makes up 70%.
Operations of the consolidated Strathcona Resources will span three concentrated core areas. These include Cold Lake Thermal with 55,000 barrels per day (bbls/d), Lloydminster Heavy Oil with 55,000bbls/d, and Montney with 75,000boe/d.