Tourmaline Oil has agreed to acquire rival Canadian oil and gas firm Bonavista Energy in a cash and stock deal worth C$1.45bn ($1.06bn) as part of its consolidation strategy in Western Canada’s Deep Basin.
As per the share purchase agreement, the consideration is made up of C$725m ($532.2m) worth of shares of Tourmaline and an equal amount in cash at closing, after deducting Bonavista Energy’s net debt.
Bonavista Energy is a natural gas liquids weighted producer. Its operations in Western Canada are focused on the Alberta Deep Basin.
Its acquisition adds low-decline, long-life average production of over 60,000 barrel of oil equivalent per day (boepd) to Tourmaline Oil.
Bonavista Energy’s net operating income is estimated to be around C$450m per year in 2024 through 2026 based on strip pricing, with expected exploration and production spending of under C$225m per annum on the assets.
The company possesses 459 million boe in proven and probable reserves as of 1 October 2023, along with an estimated 839 gross horizontal drilling sites and rights to 1.2 million net acres of land.
According to Tourmaline Oil, the assets of Bonavista Energy naturally extend its current operations in the Deep Basin where it claims to be the largest producer.
After the acquisition is over, Tourmaline Oil anticipates concluding 2023 with a production level exceeding 600,000boepd. Apart from the Alberta Deep Basin where it has more than three million acres of land position, Tourmaline Oil has operations across Northeast British Columbia (NEBC) Montney and the Peace River Triassic Oil area.
The boards of directors of both companies have approved the transaction unanimously.
Subject to receipt of regulatory and stock exchange approvals, the deal is anticipated to close in the latter half of next month.
Peters & Co. provided financial advisory services to Tourmaline Oil, while TPH&Co, the energy division of Perella Weinberg Partners, served as financial advisor to Bonavista Energy.
