Whitecap Resources Acquires Montney-focused Kicking Horse Oil & Gas
TSX-listed Whitecap Resources Inc. has entered into an arrangement agreement with global PE firm Quantum Energy Partners to acquire its indirect subsidiary Kicking Horse Oil & Gas Ltd. for aggregate consideration of C$300 million, payable in cash, stock, and the assumption of net debt.
Under the terms of the agreement, Whitecap will acquire 100% of Kicking Horse in exchange for an initial cash consideration of C$56 million, a stock consideration of approximately C$190 million payable via issuance of 34.5 million Whitecap common shares (based on the 5-day VWAP prior to the signing of the agreement), and the assumption of C$54 million of estimated net debt (as of February 28th, 2021).
Calgary-based Kicking Horse is focused on the development of the condensate-rich Montney play, and currently owns 92 gross (60 net) sections and 362 net drilling locations in the Kakwa region of Alberta. Total proven (1P) and proven plus probable (2P) reserves attributable to the assets (as of April 1st, 2021) are approximately 59.4 and 88.9 million barrels of oil equivalent (MMboe) respectively. Production from the acreage currently averages 8,000 barrels of oil equivalent per day (boe/d), of which around 32% is oil/liquids.
Upon completion, the pro-forma enterprise value of Whitecap will be approximately C$4.8 billion, based on the total shares outstanding and price per share of C$5.75 per share on April 1st, 2021. The combined entity will hold interests in around 168 gross (118 net) sections with 437.4 net drilling locations identified across numerous Montney benches in Alberta. The average daily production for 2021 is estimated to be around 108,000 boe/d, 76% of which is expected to be oil/liquids.
“We see this asset base as another significant facet of the expanding Whitecap footprint which will benefit from the advantages of scale as part of a larger franchise,” said Steve Harding, CEO of Kicking Horse.
Also based in Calgary, Whitecap Resources’ operations are focused on liquids-rich producing assets across Alberta, British Columbia, and Saskatchewan, including the Boundary Lake area, Deep basin, Cardium formation, southwest Saskatchewan Viking formation, and the Weyburn and Midale units in south-east Saskatchewan.
“We are excited about adding this asset to our portfolio as an advancement of our Montney growth strategy, creating an additional opportunity for our team to further generate strong returns for our shareholders,” added Whitecap’s CEO Grant Fagerheim.
The transaction, which is subject to the receipt of Kicking Horse’s security holder, regulatory, and stock exchange approvals, is expected to close on or before May 31st, 2021.