Paramount Resources has signed an agreement to sell 310 net sections of its Deep Basin oil and gas properties in the Musreau / Kakwa area of west Central Alberta, Canada, to Seven Generations Energy for approximately C$1.9bn ($1.4bn).
The assets encompass about 310 net sections of land and also include minor facilities and gathering systems related to the oil and gas properties that are put up for sale.
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Paramount Resources president and CEO Jim Riddell said: “We believe this transaction provides a compelling opportunity to realise premium value on a portion of our Montney acreage for our shareholders.
“The pure play Kakwa Montney asset base of Seven Generations provides Paramount shareholders the closest proxy for continued ownership of the disposed assets, while significantly reducing our indebtedness.”
Upon closing of the transaction, Paramount will be able to continue the development of its other Deep Basin properties at Karr / Gold Creek, Smoky / Resthaven and Valhalla.
The transaction is subject to the receipt of all necessary regulatory approvals and the satisfaction of other customary closing conditions and is expected to close in August this year.
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By GlobalDataSeven Generations Energy president and chief operating officer Marty Proctor said: “This counter-cyclical acquisition is a natural consolidation of our high-growth Nest resource play, where our highest value Nest 2 acreage will increase by more than 40%, from 101 to 144 sections.
“Upon deal completion, we will have assembled more than half a million net acres of concentrated Montney lands, one of North America’s most prolific resource plays.”
In case the transaction is not completed, Paramount will have to pay an $80m termination fee to Seven Generations as per the agreement.
Paramount will hold about 10% of the outstanding 7G Shares and will have around 10,500 barrels of oil equivalent per day (Boe/d) of production primarily focused on its retained Montney lands and about 43MMboe of proved and probable reserves following the deal.
The company will also continue to hold investments, including exploratory shale gas assets in the Liard Basin, northern frontier assets in Central Mackenzie and the Mackenzie Delta, oil sands assets and seven rigs held through its wholly-owned subsidiary Fox Drilling.
