Canadian oil company Crescent Point Energy has reached an agreement to buy Hammerhead Energy in a deal valued at C$2.55bn ($1.86bn).
The cash and stock transaction includes assumed net debt of approximately C$455m.
Hammerhead shareholders will be entitled to receive C$15.50 in cash and C$5.50 worth of Crescent Point common shares for each fully diluted common share of Hammerhead held.
Crescent Point said the deal will create the seventh-largest E&P company in Canada based on production volume, and the largest landowner in oil and liquids-rich Alberta Montney.
Hammerhead’s acquisition adds some 800 net Montney drilling locations and a net production capacity of approximately 56,000 barrels of oil equivalent per day (boed) to the company's operations.
Additionally, the company anticipates benefits from existing long-term contracts that provide it with sufficient market access for future scalability.
Crescent Point's updated 2024 preliminary guidance projects 200,000–208,000boed (65% oil and liquids) of annual production.
The earlier projected production was 145,000–151,000boed, reported Reuters.
Crescent Point president and CEO Craig Bryksa said: “The acquired assets, which are situated in the volatile oil window in the Alberta Montney and adjacent to our existing lands, provide significant value with premium drilling inventory, infrastructure ownership and scalable market access.
“This transaction is expected to be immediately accretive to our per share metrics and to enhance our return of capital profile for shareholders. Upon completion of the transaction, Crescent Point will have a dominant position in both the Alberta Montney and Kaybob Duvernay plays, which are complemented by our low-decline, long-cycle assets in Saskatchewan.”
Hammerhead president and CEO Scott Sobie said: “Since going public in early 2023, we have delivered attractive equity returns for our shareholders, and the ability to maintain a share position in Crescent Point provides our shareholders with the ability to benefit from the continued growth of the business.”
The company expects the acquisition to close in December 2023.
In late August 2023, Crescent Point agreed to sell its assets in North Dakota, US, for around $500m.
