File photo of an oil pump jack pumps oil in a field near Calgary.© Todd Korol / Reuters
Whitecap Resources Ltd. is buying Saskatchewan light oil producer Beaumont Energy Inc. for $517-million in cash and stock, taking advantage of a buyer's market for energy assets as crude prices languish.
Whitecap is also issuing $110-million in equity, the latest in an unexpected rush of bought deals in the energy sector.
Including the assumption of $70.5-million in Beaumont's debt, the total value of the deal is $587-million. It expands Whitecap's operations in the Viking region of western Saskatchewan.
Under the transaction, Beaumont shareholders can take 0.4 of a Whitecap share, with an option to take cash up to a maximum of $103.4-million. The transaction pegs the value of Whitecap shares at $14.05 each.
Whitecap, led by CEO Grant Fagerheim, is one of a few companies often noted as having the assets and financial capability to weather the current oil price collapse and capitalize on weakness elsewhere in the sector.
Whitecap said it will add 3,700 barrels a day of production this year's total average, lifting overall output by 10 per cent to 39,700. It is also expected to boost cash flow by 15 per cent to $473-million.
Under the bought deal, Whitecap is issuing 8.1-million subscription receipts at $13.50 each, which can be exchanged for shares once the deal is completed. The syndicate is led by National Bank Financial.