Canadian gas producer Hammerhead Resources has agreed to merge with special purpose acquisition company Decarbonization Plus Acquisition Corporation IV (DCRD) in a deal valued at C$1.39bn ($1.02bn).
The transaction will result in the creation of a publicly traded upstream oil and gas company, which is expected to be listed on the Nasdaq Capital Market (Nasdaq).
The entity will focus on decarbonising its oil and gas operations through the development of a carbon capture and sequestration (CCS) programme.
The firm’s assets will comprise a large block of acreage, covering an area of over 100,000 net acres in the prolific Montney trend in Alberta.
In a statement, DCRD said: “Once Canadian liquefied natural gas has materialised, Hammerhead believes that its resource base will be well positioned to serve global markets with low-carbon hydrocarbons as the global economy reduces its carbon footprint.”
Expected to close in Q1 2023, the transaction would generate approximately $320m in gross proceeds, assuming minimal redemptions.
The combined company, which would aim to achieve net-zero emissions on a Scope 1 and Scope 2 basis by 2030, will be managed by Hammerhead’s current executive team.
Hammerhead CEO Scott Sobie said: “Not only does Hammerhead stand poised to harvest what we consider to be among the most attractive rates of return well locations in Western Canada, but Hammerhead’s current emissions profile is already advantaged through its investment of over C$400m in modern, technically optimised facilities that are being utilised across its properties.”
Hammerhead is backed by private equity firm Riverstone Holding and has assets and operations in Alberta.