Canadian Natural Resources Ltd. (CNRL), the nation’s top fossil fuel producer, scooped up 434 square miles of the liquids-rich Montney Shale gas formation in northern British Columbia (BC) with a friendly takeover of Painted Pony Energy Ltd.

Painted Pony management recommended stockholder acceptance of CNRL’s cash offer of C$0.69/share ($0.52), or C$111 million ($83.3 million) for all 160,995,692 Painted Pony shares, CNRL said Monday.

Counting C$350 million ($262.5 million) in Painted Pony debt, the total transaction value is C$461 million ($346 million).

In its recommendation to stockholders, Painted Pony attributed the takeover to “weak prices for natural gas over the past three years and a recent decline in natural gas liquids.” Painted Pony had been searching for a purchaser.

In combination with soft investment markets for fossil fuel company shares, severe energy price lows inflicted by the Covid-19 virus pandemic “deprived Painted Pony’s asset base of the capital necessary to fund meaningful development,” it said.

CNRL, with first-half 2020 daily production of 1.4 Bcf of gas and 930,286 bbl of oil, dwarfs Painted Pony’s 270 MMcf of gas and 4,600 b/d of gas liquids entirely from its Montney properties.

A western Canada-wide and international asset portfolio enables CNRL to survive through market lows in anticipation of eventually resuming growth.

“Painted Pony’s land and production are located within Canadian Natural’s core area, providing opportunity to leverage synergies with a significant amount of pre-built infrastructure and transportation available,” said CNRL.

The location of the acquired assets, 277,568 acres of Montney drilling targets beside the Alaska Highway near Fort St. John, positions the company to become supply sources for the LNG Canada export terminal under construction on BC’s northern Pacific coast.

“This transaction also allows us to further insulate against natural gas costs in our oil sands operations,” said CNRL president Tim McKay.

Nearly three-quarters of the company’s current liquids production comes from the northern Alberta oil sands, including 220,555 b/d from thermal plants that use gas-fired steam injection for underground bitumen extraction.

The takeover deal is scheduled to close before the end of this year, following a vote by Painted Pony stockholders.