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Obsidian weighs alternatives to maximise shareholder value
Posted on Tuesday, 10 September 2019 14:27
Obsidian Energy has decided to run a strategic review of alternatives in a bid to maximise shareholder value and determine the best path for the Canadian oil and natural gas company.
The group is weighing options such as a complete sale, merger or other business combination, a disposal of all assets, a recapitalisaion or refinancing of its capital structure.
While the company cautioned there is no guarantee the review will lead to a deal, the outcome of the process depends on opportunities which arise within the exploration of alternatives.
Obsidian said that given its large position in the Cardium acreage, the initiation of this plan will allow for consideration of consolidation within the shale in Alberta.
Tudor, Pickering, Holt and Co have been hired to advise the company in connection with the strategic review.
Shares in Obsidian rose 28.2 per cent to CAD 1.73 (USD 1.31) at 09:12 following the announcement today, giving the group a market capitalisation of CAD 98.53 million.
The company has a portfolio of high-quality assets producing roughly 30,000 barrels of oil per day (boe/d).
In 2017, Obsidian changed its name from Penn West Petroleum.
Total daily production in the six months to 30th June 2019 was 27,744 boe/d, compared to 29,068 boe/d in H1 2018.
Zephyr, the M&A database published by Bureau van Dijk, shows there have been 796 deals targeting the oil and gas extraction industry announced worldwide in 2019 to date.
The largest of these by far involves Occidental Petroleum agreeing to buy Anadarko Petroleum for USD 57.00 billion.
In the second-biggest deal, Occidental will receive a USD 10.00 billion investment from Berkshire Hathaway contingent on the acquisition going through.
Exxon Mobil’s Norwegian offshore assets, Carrizo Oil & Gas, Devon Canada’s assets and Petroleo Brasileiro, among others, were also targeted in the year so far.
© Zephus Ltd