Oil and gas producers Whitecap Resources Inc. and Veren Inc. are joining forces in a $15-billion deal to create the biggest landholder in two Alberta shale formations.
Under the all-stock transaction, Veren shareholders are to get 1.05 shares of Whitecap for each Veren share they own, the companies said Monday.
The combined firm is to be led by Whitecap’s existing management team under the Whitecap name.
Four directors are to join the Whitecap board of directors, including Veren’s current chief executive, Craig Bryksa.
The deal is expected to close before May 30.
Whitecap CEO Grant Fagerheim said the deal gives his company a leading position in the Montney and Duvernay shales in western Alberta, which are rich in valuable natural gas liquids. It will also grow its light oil position in Saskatchewan.
“Our combined company will include exceptional technical and support personnel from the two companies in both the office and field and an experienced board of directors that prioritizes sustainable and profitable growth to generate strong returns for our combined shareholders,” Fagerheim said in a news release.
Bryksa says the transaction positions the new company to have a competitive advantage.
“This strategic combination unlocks significant value for all shareholders and together positions us as a stronger, more resilient company,” Bryksa said in the release.
Veren, which changed its name from Crescent Point Energy last year, saw its shares spike 14 per cent to $8.03 in late-morning trading on the TSX.
Whitecap shares were down almost 15 per cent to $7.95.
Desjardins analyst Chris MacCulloch said after the deal closes, Whitecap will be the seventh-biggest Canadian oil and gas producer, with a production base of about 370,000 barrels of oil equivalent per day.
“We view the transaction positively to the extent that it provides shareholders of both companies with exposure to a significantly larger entity with overlapping interests in several areas of the Western Canadian Sedimentary Basin, including the Alberta Montney and Duvernay plays, and in Saskatchewan,” MacCulloch wrote in a note.
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