Canada’s Baytex Energy has reached an agreement to buy its US rival Ranger Oil for approximately $2.5bn, including debt.
The cash and stock deal offers the US energy company a premium of nearly 39% compared to its current market value of $1.8bn.
As per the terms of the deal, Baytex Energy will take on Ranger’s debt load which totalled $603m at the end of September 2022, according to a Reuters report.
The deal is set to considerably increase the Canadian energy firm’s footprint in South Texas’ Eagle Ford shale basin.
As per Baytex Energy’s website, nearly 30% of its total production currently comes from the Eagle Ford shale basin.
Commenting on the deal, Baytex president and CEO Eric Greager said: “The Ranger acquisition is strategic. We are acquiring a strong operating capability in the Eagle Ford, on-trend with our non-operated position in the Karnes Trough, and driving meaningful per-share accretion on all metrics.
Greager expects the deal to more than doubles Baytex Energy’s EBITDA and nearly double free cash flow.
“The Ranger inventory immediately competes for capital in our portfolio and brings 12 to 15 years of quality oil-weighted drilling opportunities,” Greager added.
The deal has received unanimous approval from the Boards of Directors of both companies.
The agreement is scheduled to conclude in the second quarter of 2023.
“Upon closing of this transaction, we intend to initiate a dividend, which will be a key means of delivering reliable value to shareholders going forward,” Greager concluded.