Canada’s Whitecap Resources is set to acquire local rival company TORC Oil & Gas through an all-stock transaction valued at nearly C$900m ($704.12m).

The business combination is expected to create one of the largest pure play conventional light oil producers in Canada, with more than 100,000 boe/d of corporate production.

Under the agreement, TORC shareholders will receive 0.57 Whitecap common shares against each TORC common share held by them.

The combined firm is expected to have an enterprise value of around C$4bn ($3.13bn).

Additionally, the merger is expected to create significant operational synergies, bolster balance sheet, and ensure improved long-term shareholder returns.

Headquartered in Calgary, TORC has operations in Saskatchewan and Alberta. The current production of the company is around 25,000 boe/d.

Whitecap president & CEO Grant Fagerheim said: “We are combining two strong Canadian energy producers to form a leading large-cap, light oil company geared towards generating sustainable long-term returns for shareholders while prioritising responsible Canadian energy development.

“Despite the challenging conditions and significant volatility throughout the year, we have become an even stronger and more resilient energy producer entering 2021 with the combination with TORC as well as the NAL transaction announced on 31 August 2020.”

Subject to regulatory and shareholder approvals, the deal is expected to close on or before 25 February 2021.

The move comes at a time when Covid-19 pandemic has battered revenues of Canadian energy firms, triggering consolidations across the industry.

In October, Cenovus Energy and Husky Energy agreed to merge operations in a C$3.8bn ($2.9bn) deal to create a new Canadian integrated oil and gas producer.