American upstream company Chord Energy has signed a stock and cash deal worth around $11bn to merge with Canadian oil and gas firm Enerplus.
The deal is aimed at creating a premier exploration and production company with a primary focus on the Williston Basin in the US.
The combined firm will hold nearly 1.3 million net acres and a Q4 2023 production of 287 thousand barrels of oil equivalent per day (287mboepd). Oil is anticipated to constitute nearly 56% of the combined entity’s production,
As per the terms of the deal, each of the Enerplus’ shares will be exchanged for 0.10125 shares of Chord Energy’s shares and $1.84 per share in cash. The stock component makes up 90% of the consideration, while the cash part is 10%.
The consideration is inclusive of Enerplus’ net debt and values each share of the company at $18.42.
In the combined company, Chord Energy’s shareholders will have a stake of around 67%. Enerplus’ shareholders will own the remaining 33%.
Chord Energy`s president and CEO Danny Brown said: “This combination further strengthens our Williston Basin position and represents a compelling opportunity for both companies` shareholders.
“Enerplus` Williston Basin position brings high-quality inventory, and we are excited to leverage best practices from both companies to create a stronger, more efficient entity.
“The combined company is expected to benefit from improving returns, capital efficiency, low-cost inventory, and a peer-leading balance sheet, all of which support sustainable free cash flow generation and meaningful shareholder returns.”
Brown will become the director, president, and CEO of the combined entity, post merger.
Listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), Enerplus holds light oil assets in the Bakken formation in North Dakota along with a position in the Marcellus natural gas shale region in northeast Pennsylvania.
Enerplus’ production in 2023 was 100,015 barrels of oil equivalent/day.
Chord Energy, which is listed on Nasdaq, engages in upstream operations involving crude oil, natural gas, and natural gas liquids within the Williston Basin.
Enerplus` president and CEO Ian Dundas said: “This transaction brings together Chord`s and Enerplus` premier asset bases, operational abilities and technical acumen to create a combined company positioned to drive further success, deliver competitive returns and peer-leading shareholder distributions.
“Joining forces with Chord will provide Enerplus shareholders with immediate value for their investment and the opportunity to participate in the future upside potential from ownership in the stronger, larger company with enhanced shareholder returns.”
The completion of the deal is contingent upon the approval of shareholders from both companies, court approval in Canada, and obtaining regulatory clearances in both the US and Canada, among other conditions. The anticipated timeframe for its finalisation is by mid-2024.
For Chord Energy, Citi is leading as the financial adviser, with Vinson & Elkins LLP, Wachtell, Lipton, Rosen & Katz, and Goodmans providing legal counsel to Chord. Wells Fargo Securities and J.P. Morgan Securities are also contributing as financial advisers.
On the other hand, Enerplus has engaged Evercore as its primary financial adviser, while RBC Capital Markets is providing financial counsel. Legal guidance for Enerplus is provided by Blake, Cassels & Graydon and Latham & Watkins.
BMO Capital Markets and CIBC Capital Markets are collaborating as co-financial advisers to Enerplus.
Earlier this month, Devon Energy had reportedly offered to acquire Enerplus.
