Canadian oil producer Strathcona Resources has signed a definitive agreement to acquire all of the issued and outstanding common shares of Pipestone Energy to create what it claims to be the fifth-largest Canadian oil producer, with an initial market capitalisation in the region of C$8.6bn ($6.49bn).
The new public Canadian oil and gas company will continue with the name Strathcona Resources Ltd. (AmalCo).
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Upon completion of the transaction, existing shareholders of Pipestone will receive around 9.05% of the pro forma equity in AmalCo on a fully diluted basis. This equates to an exchange ratio of 0.067967 AmalCo shares per Pipestone share.
The remaining stake in AmalCo will be owned by existing shareholders of Strathcona comprising Waterous Energy Fund (99.7%) and Strathcona employees (0.3%).
The combined company will be led by Strathcona CEO Rob Morgan.
Pipestone board of directors chairman Gord Ritchie said: “We are proud to have grown Pipestone from 152boed [barrels of oil equivalent per day] to 35,162boed in just four short years, and now the combination with Strathcona allows Pipestone shareholders to share in future growth and value creation for decades.”
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By GlobalDataWith the acquisition of Pipestone’s 35,162boed, Strathcona’s total production is expected to increase to 185,000boed, of which 70% is oil and condensate.
The company will focus on three core areas including the Cold Lake oil sands region in Alberta, the Lloydminster heavy oil region in Saskatchewan and the Montney natural gas basin in Alberta and British Columbia.
Morgan said: “We are excited about the acquisition of Pipestone, which fits hand-in-glove with our existing condensate-rich Alberta Montney properties and provides a natural hedge to the natural gas and condensate consumed in our Cold Lake Thermal and Lloydminster Heavy Oil operations.”
Subject to approval from two-thirds of Pipestone shareholders, the transaction is scheduled for completion in October 2023.
