Whitecap Resources Inc. increased its liquids-rich Montney Shale natural gas assets with a C$300 million ($240 million) takeover of private equity-backed Kicking Horse Oil & Gas Ltd.The acquisition includes ownership interests averaging 65% in 92 square miles of Montney production and future drilling targets in the Grande Prairie area of northwest Alberta.
“We are excited about adding this asset to our portfolio as an advancement of our Montney growth strategy, creating an additional opportunity for our team to further generate strong returns for our shareholders,” CEO Grant Fagerheim said.
The deal raises the Calgary-based independent’s total Montney holdings to ownership interests in 168 square miles, with 696 drilling targets identified in a variety of layers in the shale formation.
The Kicking Horse assets currently produce 8,000 boe/d of gas and liquids, with liquids accounting for 32%. Whitecap also announced a C$75 million ($60 million) 2021 drilling budget for the Montney assets gained in the Kicking Horse package.
Kicking Horse CEO Steve Harding said his team had built a “world-class asset…in a challenging energy environment. We see this asset base as another significant facet of the expanding Whitecap footprint, which will benefit from the advantages of scale as part of a larger franchise.”
The transaction commits Whitecap to trade 34.5 million shares and C$56 million ($44.8 million) for Kicking Horse to its private equity owner, Quantum Energy Partners. The financial package includes C$54 million ($43.2 million) in Kicking Horse debt.
“We believe in the Whitecap story of disciplined leadership, superior execution, and low decline, high net-back assets with strong free cash flow,” said Quantum partner Garry Tanner. Whitecap also is committed to environmental, social and governance initiatives, he noted, which is “reflected in their zero net emissions, which will become essential for the oil and gas companies of the future.”
The deal is Whitecap’s third takeover since mid-2020, following acquisitions of TORC Oil & Gas Ltd. and NAL Resources Ltd., with the all-stock transactions valued at a total of about C$1 billion ($800 million).
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