Canada’s Tourmaline Oil has signed a definitive agreement to acquire liquids-rich natural gas company Crew Energy in a deal valued at C$1.3bn ($946.6m).
The all-stock transaction includes Crew’s debt, which is approximately C$240m.
Under the agreement, Crew shareholders will receive 0.114802 of a Tourmaline share for each Crew share they hold.
The purchase price is C$6.69 per Crew share, which is a premium of approximately 72% based on the closing price on 9 August.
Crew operates in north-east British Columbia (BC), where it controls a large contiguous land base rich in Montney resources.
Its Septimus and West Septimus areas are known for their liquids-rich natural gas while the Groundbirch site offers dry-gas resources.
Tourmaline expects the acquisition to enhance its South Montney assets and immediately improve its key financial and reserve metrics.
Specifically, the deal encompasses a steady production base of 29,000-30,000 barrels of oil equivalent per day (boepd), independently verified 2P reserves of 473.2 million barrels of oil equivalent, and a drilling inventory with more than 700 Tier 1 locations, including 246 net Montney sites.
Additionally, the Crew assets are next to Tourmaline's current South Montney-operated complex.
Crew’s Groundbirch project, which includes a planned 15-25 electrified deep-cut gas processing facility, could roughly double current production.
Tourmaline plans to advance the Groundbirch project within the next five years, with the exact timing to be decided in the coming year.
Tourmaline said its Crew assets offer substantial future growth potential, enhancing its Montney development and positioning it to become Canada's largest and most efficient Montney producer.
Currently claimed to be the top Alberta Deep Basin producer, Tourmaline aims to expand to 750,000 boepd over the next five years, with continued growth into the next decade.
Tourmaline president and CEO Mike Rose said: “Tourmaline's scale, execution capability and ability to generate strong free cash flow in all parts of the commodity cycle will allow Crew shareholders to realise the material embedded upside on an accelerated timeline.”
Crew president and CEO Dale Shwed added: “As Canada’s leading natural gas producer and a well-capitalised, investment-grade organisation, Tourmaline has a proven track record of developing large-scale and impactful resource projects which will now include Crew’s assets in Groundbirch and the Greater Septimus area, with the financial capacity to do so on an accelerated timeframe.”
Subject to customary closing conditions, the deal is expected to close in early October this year.
Last October, Tourmaline Oil agreed to buy Bonavista Energy for C$1.45bn.
