Tamarack Valley Energy intends to boost its position in Alberta’s Clearwater oil play in Canada with the acquisition of oil producer Deltastream Energy for a total net consideration of C$1.425bn ($1.10bn).
The transaction comes amid efforts by oil companies to benefit from the surging energy prices that have reached the highest levels in years in the wake of Western sanctions on major energy exporter Russia, reported Reuters.
As per the definitive agreement, the net consideration of the deal includes C$300m ($230.3m) in deferred acquisition payments (DAP), C$825m ($633.5m) in cash, and C$300m ($230.3m) in equity at C$3.75 ($2.87) per share.
Canada-based oil and gas company Tamarack said the unsecured DAP is payable in cash over a period of 18 months and in six instalments, plus 5.75% interest, subsequent to the closure of the transaction.
Tamarack president and CEO Brian Schmidt said: “The acquisition of Deltastream solidifies Tamarack as the largest producer in the Clearwater oil fairway. This transaction builds on the company’s core position in the Clearwater, which is recognised as North America’s most economic play.
“Deltastream brings scale and a leading economic development drilling inventory, comprised of high quality, long life assets, with low sustaining capital requirements that enhance capital allocation flexibility.”
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Tamarack expects the acquisition to add approximately 23,000 barrels of oil equivalent per day of production capacity in 2023.
Canadian private equity manager ARC Financial currently owns approximately 85% of the issued and outstanding common shares of pure-play Clearwater oil producer Deltastream.
ARC Financial managing director Bill Slavin said: “With this transaction, Tamarack will become the leading public Clearwater business, with an exceptional combined asset base.
“ARC Financial is excited to be a shareholder in Tamarack and participate in value creation from the company’s Clearwater, Charlie Lake, and enhanced oil recovery operations.”
The transaction is subject to customary conditions, and regulatory and other approvals, including the approval of the Toronto Stock Exchange. It is planned to close before the end of October 2022.