KKR, a private equity firm and the majority owner of the Canadian oil and gas producer Westbrick Energy, is reportedly planning to sell Westbrick in a potential transaction valued at between C$1.5bn ($1.13bn) and C$2bn ($1.5bn).
The private equity firm aims to finalise an agreement with a potential buyer by the end of the year, or may retain the company if it does not receive suitable offers, reported Reuters.
KKR has been a majority owner of Westbrick for a decade and has invested around C$250m in Westbrick when it was a smaller producer in 2012.
The increase in oil and gas prices has led private equity firms to sell out their energy investments after many were left stranded for longer than the usual three to five years.
The proposed sale of Westbrick marks KKR’s exit from the Canadian oil and gas business.
Apart from Westbrick, KKR also invested in other businesses in Canada, including gas processing assets and a stake in the Coastal GasLink pipeline under construction.
Westbrick chief executive officer Ken McCagherty told Reuters via email: “Anyone who knows me knows that Westbrick has been for sale every day since our existence. It is not surprising to see interest in acquiring the company, and did not respond to further questions.”
Westbrick has produced 36,000 barrels of oil equivalent per day (boepd) last year, with an aim to reach 50,000boepd by June 2022.
According to Sayer Energy Advisors, KKR’s plans to sell Westbrick builds on a 53% decline in merger and acquisition activity among Canadian oil and gas companies in the first half of this year.
Earth Horse Energy Advisors president Ryan Ferguson Young was quoted by the publication as saying: “Should Westbrick fetch a price closer to the lower end of its expected range, it would represent a lower cash flow multiple than historic multiples, due to volatile commodity prices and backwardation, a situation where spot prices exceed futures prices.”
