Private Canadian oil company Strathcona Resources announced this week its intent to acquire smaller producer Pipestone Energy in an all-stock transaction. Strathcona said upon closing it will move to become a publicly traded company with a market capitalization of nearly $6.5 billion.
On a pro forma basis, the deal creates the fifth-largest oil and gas producer in Canada as a measure of liquids production and proved reserves. The focus of the deal hinges on Pipestone’s position in the gas- and liquids-rich Montney Shale in Alberta.
The combined company will boast 185,000 BOE/D (152,000 BOE/D from Strathcona; 35,000 BOE/D from Pipestone), 70% of which is reported as crude and gas condensate. The combined portfolio includes the Cold Lake thermal project (55,000 BOED), Lloydminster heavy-oil project (55,000 BOE/D), and operations in the Montney (75,000 BOE/D).
Adam Waterous, executive chairman of the Calgary-based Strathcona, said the oil and gas company may be on course to top 325,000 BOE/D within 8 years.
“Over the last six-and-half years we have built Strathcona from 5,000 BOE/D to 185,000 BOE/D through a combination of organic growth and complementary acquisitions,” he said in a statement, adding that the the firm is "excited to continue building Strathcona within the public markets."
Shareholders of Pipestone, which is publicly traded and had a market value over $750 million at the time of the deal's announcement, will own nearly 9% of the combined firm.
Strathcona expects the transaction to close in the fourth quarter of the year after which it will seek a listing on the Toronto Stock Exchange.
