New Alberta management will take over Atlantic Canada’s lone natural gas producer with plans to revive east coast supply development and shop for bargain-priced western oilfield assets under a transaction announced on Monday.
After a two-month “strategic review” Halifax-based Corridor Resources Inc. unveiled its rebirth as Headwater Exploration Inc. led by Calgary industry veterans. The deal includes up to C$50 million ($37.5 million) in private share sales.
The Calgary group’s credentials include building three western oil and gas growth firms that attracted profitable takeovers: Raging River Exploration Inc., Wild Stream Exploration Inc. and Wild River Resources Inc.
Corridor’s directors and managers recommended shareholder acceptance of the corporate rebirth, with CEO Steve Moran calling the deal a “transformative” combination of current assets and proven industry growth expertise.
“The Headwater management team is energized and truly believes that the Corridor platform can lead us into becoming a leading Canadian energy producer,” said Alberta group leader and engineer Neil Roszell, who will replace Moran as CEO.
The Alberta team predicts “unabated growth” in east coast gas supply development if the Conservative government of New Brunswick succeeds with a plan to allow horizontal drilling and hydraulic fracturing (fracking) on Corridor’s resource leases.
A regulation enabling exemptions from the former Liberal administration’s fracking ban was enacted in mid-2019 but no permits have been issued. The move prompted native and environmentalist protests. The Conservatives’ freedom of action is limited by their modest stature as only the largest minority in the New Brunswick legislature.
Corridor-Headwater estimates demand for new gas supply at about 140 MMcf/d in New Brunswick and Nova Scotia alone since offshore production ended in 2018 and markets resorted to imports from the United States and Western Canada. The projection excludes potential sales to natural gas export terminals proposed on Nova Scotia’s Atlantic coast.
The firm’s new management pledged to join the New Brunswick Conservatives in native tribe consultations on exemptions from the six-year-old fracking ban. Multiple supply growth opportunities have been identified, said the Calgary group.
In the West. where British Columbia, Alberta and Saskatchewan allow fracking, the Corridor-Headwater group said, “Current market conditions in the Canadian energy sector provide an ideal entry point for a well capitalized company.” From its Calgary vantage point the firm’s new management team said “the market price for assets relative to net asset value has only been this low twice in the last 20 years.”
Financial resources in Corridor-Headwater “will allow the company to first, take advantage of mispriced assets and second, unlock the value of the assets through disciplined capital allocation and greenfield development,” management said.