Canadian oil producer Crescent Point Energy said it has agreed to acquire Hammerhead Energy in a cash and stock deal valued at C$2.55 billion ($1.86 billion) to boost its presence in the Montney shale play in Alberta.
Hammerhead’s assets are adjacent to Crescent Point’s position in Montney, one of Canada’s most attractive oil and gas-producing regions due to its strong economics.
The deal would create Canada’s seventh-biggest energy producer and add about 800 net Montney drilling locations, Crescent Point said.
The company raised its 2024 production forecast to the range of 200,000 to 208,000 barrels of oil equivalent per day (boepd), compared with the 145,000 to 151,000 boepd projected earlier.
“This strategic consolidation is an integral part of our overall portfolio transformation,” said Crescent Point CEO Craig Bryksa, adding the acquisition would ensure his company has over 20 years of premium drilling inventory.
Crescent Point also bought Spartan Delta’s Montney assets earlier this year in a C$1.2 billion deal.
The 50,000 square-mile (32 million acre) area spanning northern Alberta and British Columbia is considered Canada’s top shale play and also garnering interest potential U.S. investors, dealmakers said last week.
“This is another sign of the attractiveness of the entire resource in the Montney,” said RBN energy analyst Martin King. “The best thing about the play is the finding cost, especially for natural gas, is very, very low.”
U.S.-listed shares of Hammerhead rose 5.2% after the bell, while Crescent Point’s New York-listed shares fell 6.1%.
Hammerhead shareholders would receive C$21.00 per fully diluted common share of Hammerhead, through a combination of approximately C$1.5 billion in cash and 53.2 million common shares of Crescent Point.
The share value implies a 5% premium compared to Hammerhead’s closing price on Monday, according to Reuters calculations.
Crescent Point said it plans to raise its dividend by 15% to 46 Canadian cents per share on an annual basis, once the deal closes.
