Canadian-based natural gas company Painted Pony Petroleum has closed the acquisition of UGR Blair Creek (UGR).

Under a share purchase agreement signed between Painted Pony and Unconventional Resources Canada (URC) in March this year, Painted Pony purchased all of the shares of UGR from URC in exchange for the issuance of 41 million Painted Pony shares.

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The deal also included the assumption of UGR's net debt of approximately $48m on closing and the payment of certain transaction costs.

UGR, a 100% owned subsidiary of URC prior to the transaction, operates assets in Montney with established production, infrastructure and land holdings jointly with and adjacent to Painted Pony's assets in north-east British Columbia (NEBC).

This acquisition move is part of a strategic expansion of Painted Pony's Montney project in NEBC, thereby resulting in an expansion of its land base, natural gas processing infrastructure, reserves and drilling inventory.

"Around 35 Montney wells have been drilled on the UGR lands to date, 20 of which have been drilled in partnership with Painted Pony."

Following the acquisition, the company now has increased its Montney land position by 52% to 314 net sections, while the owned and third-party firm processing capacity stands at 155mmcf/d.

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UGR adds 218 (197 net) proved and probable undeveloped drilling locations to the portfolio of Painted Pony, which had a working interest in 57 of the 218 gross drilling locations as of 31 December last year.

Around 35 Montney wells have been drilled on the UGR lands to date, 20 of which have been drilled in partnership with Painted Pony.

Given the completed transaction and based on a 2017 capital spending programme of $348m, Painted Pony estimates annual average daily production for this year to increase by 12% from around 260 million cubic feet equivalent a day (mmcfe/d) (43,000 barrels of oil equivalent a day [boe/d]) to approximately 290mmcfe/d (48,400boe/d).