Adding to the Calgary-based oil and gas producer’s week of big news, Canadian Superior Energy Inc. announced Wednesday that it is growing its Western Canadian oil and natural gas production through an agreement to acquire its privately owned neighbor, Seeker Petroleum Ltd., for approximately C$51.8 million, including the assumption of approximately C$8.5 million of net debt.

Under the terms of the deal, Canadian Superior will offer C85 cents cash for each Seeker common share or 0.2285 Canadian Superior common shares (priced at C$3.72/share) for each Seeker common share, subject to a maximum cash component of C$14.21 million and maximum share component of 7.7 million Canadian Superior shares.

Earlier this week, Canadian Superior and its partners, BG International Ltd. and Challenger Energy Inc., reported a new natural gas discovery about 60 miles off Trinidad and “are encouraged by the initial test results” (see Daily GPI, Jan. 15).

“Canadian Superior’s strategy is to grow our international business, as evidenced by our natural gas discovery offshore Trinidad earlier this week, and to grow our Western Canadian production base internally through the ‘drill bit’ and by acquisitions,” said Canadian Superior CEO Craig McKenzie. “This transaction is consistent with our strategy and is also accretive to our bottom line. Seeker is a very good geographical fit with our current production and offers excellent additional drilling potential for both oil and gas.”

Canadian Superior will acquire approximately 1,035 boe/d (72.5% natural gas, 27.5% oil and liquids), approximately 2,073 MMboe of proven plus probable reserves with approximately 1,297 MMboe of additional possible reserves, 57,060 net acres (101,255 gross acres) of undeveloped land and 102 sq. km of proprietary 3-D seismic. In addition to the 1,035 boe/d current production, Seeker has approximately an additional 240 boe/d (67% light oil) that is anticipated to be on-stream early February. Canadian Superior said the transaction will increase its Western Canadian production base by 31% to more than 4,350 boe/d. The company will have more than 160,000 acres of undeveloped land (68% average working interest) in Western Canada.

“Canadian Superior offers our shareholders the opportunity to merge into a well capitalized public company with listings on both the TSX and AMEX,” said Seeker CEO Leif Snethun. “In addition, our shareholders will continue to have exposure to the Seeker assets while being able to participate in a larger production base and Canadian Superior’s high-impact international projects.” Seeker’s major operating areas in Alberta include Puskwaskau, Kaybob/Windfall, Mulligan and Red Earth, and in British Columbia, Cabin/Petitot and Parkland.

The boards of directors of both Canadian Superior and Seeker have unanimously approved the transaction. The transaction contains a mutual noncompletion fee in the amount of C$2 million, which is payable by Seeker or Canadian Superior to the other, as the case may be, in certain circumstances if the transaction is not completed. The transaction requires the approval of Seeker shareholders along with customary regulatory, court and other approvals.

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