Canadian oil and gas companies Tamarack Valley Energy and Headwater Exploration have agreed to combine in an all-stock transaction valued at $7.25bn (C$10bn), creating an oil producer focused on the Clearwater formation in Alberta.
Tamarack is listed on the Toronto Stock Exchange (TSX) under the symbol ‘TVE’. The company explores for, develops and produces oil and natural gas in the Western Canadian Sedimentary Basin, with heavy oil assets at Nipisi, Marten Hills and South Clearwater.
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Headwater trades on the TSX as ‘HWX’. Its main heavy oil operations are in Alberta’s greater Marten Hills area, alongside gas production at McCully near Sussex, New Brunswick.
Under the terms of the deal, Headwater shareholders will be issued with one Tamarack common share for each Headwater share. This will result in Tamarack issuing 237.8 million shares to acquire all the shares of Headwater.
Tamarack investors will hold 66.5% of the merged group and Headwater investors 33.5%.
Tamarack’s current management will lead the combined company.
The pro forma entity is expected to have run-rate production above 80,000 barrels of oil equivalent per day (boepd) in the Clearwater Formation. It will have net cash of more than C$50m and available funding exceeding C$1.2bn, including an undrawn C$875m credit facility maturing in May 2030.
The companies expect the deal to increase Tamarack’s free funds flow per share by more than 10%, reduce its 2027 decline rate to 15% and lower its unhedged free funds flow breakeven to $37 per barrel.
They estimate run-rate synergies of more than C$50m a year, or in excess of C$350m across the development plan.
On a pro forma basis, Tamarack forecasts 2026 production of 65,500–67,500boepd, representing a 7% increase on its previous guidance.
Its 2026 capital programme is expected to total C$450–470m, while the two companies’ combined full-year investment programmes are forecast at around C$700m.
The merged company is expected to control more than 1,500 sections across the Clearwater fairway, with over 300mboe of proved and probable (2P) reserves and more than 3,000 identified drilling locations.
Some non-core exploration assets will be transferred to newly formed Tributary Exploration. These include Mannville-stack exploration rights in Alberta, thermal heavy oil prospects at Handel in Saskatchewan and legacy McCully gas production in New Brunswick.
Tributary is expected to be led by current Headwater management, including Neil Roszell as executive chair and Jason Jaskela as president and CEO.
Closing is anticipated midway through the fourth quarter of 2026, subject to shareholder, court, Competition Act and TSX approvals.
