A 14.7-million-acre (23,000-square-mile) spread of legacy oil and natural gas properties formed Monday when Canadian Natural Resources Ltd. (CNRL) and PrairieSky Royalty Ltd. agreed to pool their private drilling rights in Saskatchewan, Alberta and British Columbia.

The marriage sires a single investment entity to dominate ownership of private mineral titles that Canada’s federal government issued in the 19th century to participants in the transcontinental railway-building era. The grants ended before the turn of the 20th century, leaving the majority of western minerals to be held to this day as provincial government-owned Crown or public resources while settlers obtained only land surface titles.

The transaction, scheduled to close by the end of this year, takes the form of a sale by CNRL of 5.4 million rights acres (14,794 square miles) to PrairieSky, which was spun off onto stock exchanges last year by Encana Corp. The company is heir to the biggest array of private mineral rights as a combination of Alberta Energy Co. and PanCanadian Energy, which was the Canadian Pacific Railway’s oil and gas arm.

The deal is worth C$1.8 billion (US$1.4 billion) to CNRL, which receives C$680 million (US$510 million) in cash plus 44.4 million PrairieSky shares. CNRL declared plans to reduce debt with all the cash and eventually distribute enough of the corporate paper to its own stockholders to limit its ownership of PrairieSky to 10%. PrairieSky is raising the cash with a private share sale.

PrairieSky markets drilling rights to a variety of operating companies in trade for production royalties as a continuing, reliable basis for corporate share sales to institutional and personal investors across Canada.

CNRL and PrairieSky, in a joint statement, described the mineral rights pool as a formula for steady growth, as and when gas and oil prices recover to stimulate supply development. Current production on the properties contributed by CNRL is gas and oil equivalent to 6,700 b/d.

“The combined asset base represents the largest independent oil and natural gas royalty position in Canada, with widespread exposure to multiple oil and natural gas resource plays, including an unparalleled position in the Viking light oil play in Western Saskatchewan and the multi-zone Deep Basin fairway of Alberta and British Columbia,” the companies said.

The first operator to jump into in the combined rights pool is CNRL, which kept access to a 104,000-acre (162-square-mile) parcel in western Saskatchewan where the firm recently scored a promising heavy oil discovery.