Vitesse Energy has signed an agreement to acquire Lucero Energy in an all-stock transaction valued at $222m (C$317.02m).
This strategic move is expected to enhance Vitesse's scale and operations, particularly in the Bakken region, while supporting an increase in Vitesse's dividend.
Under the agreement, Lucero shareholders will receive 0.012 of a Vitesse common share for each Lucero share, resulting in approximately 8.175 million shares issued at closing.
This transaction will see existing Vitesse stockholders owning around 80% of the company and Lucero shareholders roughly 20%.
Jefferies and Evercore are advising Vitesse with Baker Botts and Blake, Cassels & Graydon serving as legal advisors.
RBC Capital Markets and Peters & Co. are advising Lucero with Burnet, Duckworth & Palmer and Davis Graham & Stubbs serving as legal advisors.
The boards of both companies have unanimously approved the transaction, which is expected to close by Q2 2025, subject to customary closing conditions and regulatory approvals in the US and Canada.
Vitesse chairman and CEO Bob Gerrity said: “We are acquiring a high-quality company that has been very well managed and will be a terrific complement to our existing business. We are excited to add an operated leg to our strategy, while keeping our emphasis primarily on non-op.
“This opens the door to acquiring operated and non-operated packages that are accretive to our dividend, while giving us proportionately more control over our future capital spending. In addition, this transaction supports our ability to pay the dividend, and the anticipated increased liquidity furthers our ability to make future acquisitions.”
Lucero's assets include approximately 6.4 million barrels of oil equivalent per day of production in the Bakken, with no outstanding debt and $56m in cash as of 30 September 2024.
Lucero president & CEO Brett Herman said: “We are very proud of the significant steps we have taken to enhance Lucero’s asset base, operational performance and balance sheet over the past several years.
“Combining with Vitesse will provide Lucero shareholders with immediate value for their investment and the opportunity to participate in the future upside from ownership in a stronger, larger company with enhanced shareholder returns.”
“The transaction creates a unique oil-weighted company with assets in the core of the Williston Basin exhibiting lower production declines, high operating netbacks and strong capital efficiencies.”
Vitesse plans to use part of this cash to reduce its revolving credit facility borrowings and aims to achieve $3m in annual general and administrative synergies from this acquisition.
The transaction will be structured as a plan of arrangement under the Business Corporations Act (Alberta) and requires approvals from Lucero and Vitesse shareholders and the Court of King's Bench of Alberta.
Post-acquisition, Vitesse's board will expand to nine members including two nominees from Lucero's board.
Vitesse's leadership team will remain unchanged and it intends to hedge a significant portion of commodity risk through 2026, continuing its strategy to stabilise cash flow and support its dividend.
