Peyto Exploration & Development, a Canadian producer of unconventional natural gas, has agreed to acquire Repsol Canada Energy Partnership for C$636m ($468m) in an all-cash deal.
Repsol Canada Energy Partnership undertakes the Canadian upstream oil and gas business of Spain-based Repsol Exploración.
The deal also includes all associated midstream facilities and infrastructure which are primarily located in the Deep Basin in Alberta.
Peyto said that the assets included in the transaction would significantly enhance its Deep Basin land holdings by adding 455,000 net acres in the greater Edson area, with an average of 65% working interest. The newly acquired assets directly overlap with the company’s existing geological prospects, infrastructure, and land holdings.
The assets contribute approximately 23,000 barrels of oil equivalent per day (boe/d), comprising approximately 75% natural gas production and 25% natural gas liquids (NGL) production. They are anticipated to experience an estimated annual base production decline rate of around 12%.
According to Peyto, the assets have remained untouched by drilling activities for the past few years and are currently at a development stage similar to where the company’s adjacent lands were a decade ago.
Internally, Peyto has identified more than 800 gross locations, offering a substantial inventory of high-quality drilling opportunities that can sustain production for multiple years. The potential production from the assets could reach 100,000boe/d, said the Canadian gas producer.
Peyto will be adding 90 million barrels of oil equivalent (MMboe) in proven developed producing (PDP) reserves and an additional 306 million barrels of oil equivalent (MMboe) in proven plus probable (2P) reserves.
The deal also adds five natural gas plants, one of which is currently suspended. These plants collectively have a net natural gas processing capacity of approximately 400 million cubic feet per day (MMcf/d).
Additionally, the deal brings with it a network of approximately 2,200km of operated pipelines and a 12MW cogeneration power plant. Among the assets included in the deal are the Edson gas plant and the Central Foothills gas gathering system.
Peyto president and CEO Jean-Paul Lachance said: “This acquisition marks a very important milestone for Peyto. We have coveted these lands for many years and this asset checks all the boxes for us.
“Peyto has a history of being very selective when it comes to acquisitions but is also very successful in realising value from them.
“The Repsol assets fit perfectly with Peyto’s existing Deep Basin acreage and offer a significant number of top-tier undeveloped locations that will immediately compete for capital within our portfolio.”
Subject to the relevant regulatory approvals and other customary closing conditions, the deal is anticipated to close in mid-October 2023.
