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Vermilion snapping up Spartan
Posted on Tuesday, 17 April 2018 09:13
Canadian oil and gas producer Vermilion Energy is acquiring domestic rival Spartan Energy in an all-scrip transaction worth around CAD 1.40 billion (USD 1.11 billion), including the assumption of CAD 175.00 million in debt. The board-approved offer is slated to complete in mid-June 2018 and will be subject to customary closing conditions, including the usual raft of regulatory approvals. Each share in the target will be exchanged for 0.15 of the buyer’s securities, valuing the stock at CAD 6.50 apiece. This bid price represents a 5.0 per cent premium on Spartan’s close of CAD 6.19 on 13th April 2018, the last trading day prior to the announcement. Vermilion anticipates the purchase will generate significant free cash flow and increase light oil production in Canada and the US. The group, which is listed on the Toronto and New York stock exchanges, forecasts production of up to 77,500 barrels of oil equivalent per day (BOE/d) in 2018. It posted net earnings of CAD 124.48 million and revenues of CAD 1.02 billion for the 12 months ended 31st December 2017. Listed oil and gas exploration firm Spartan operates in central Alberta and southeast Saskatchewan and projects production for 2018 will reach 23,000 BOE/d (91.0 per cent oil). The company, which had a market capitalisation of CAD 1.09 billion as of 13th April, booked a net loss of CAD 26.07 million and revenue totalling CAD 359.26 million in 2017. Zephyr, the M&A database published by Bureau van Dijk, shows that this is the second-largest deal targeting a Canadian oil and gas extractor announced since January 2018. The most valuable such transaction was worth USD 1.25 billion and involved MEG Energy selling stakes in its Access Pipeline interest and Stonefell terminal interest to construction and operating energy infrastructure specialist Wolf Midstream. Other targets in 2018 include C21 Investments and Relentless Resources, in private placings worth USD 26.01 million and USD 5.74 million, respectively. © Zephus Ltd