Corporate M&A

Kiwetinohk Resources Acquires Remaining 48.4% Stake in Distinction Energy

By Sakshi Jain
June 28, 2021
2 minutes read
Person Holding Maple Leaf

Privately-held Kiwetinohk Resources Corp. has entered into a business combination agreement with Calgary-based Distinction Energy Corp. to acquire the 48.4% issued and outstanding share capital that it does not already own, in an all-stock corporate transaction. Kiwetinohk Resources is currently the largest shareholder of Distinction Energy, holding approximately 51.6%, with Luminus Energy IE Designated Activity Co. holding an approximately 27.6% stake.

Under the terms of the deal, Kiwetinohk Resources will acquire the remaining 48.4% stake in Distinction Energy by way of an exchange of 20 Kiwetinohk Resources shares for each Distinction Energy share. Upon completion, Kiwetinohk Resources will succeed to the reporting issuer status of Distinction Energy, and the combined company will operate under the name ‘Kiwetinohk Resources Corp.’

Privately-held Distinction Energy is engaged in the exploration, development, and production of crude oil, natural gas and natural gas liquids in western Canada, with a primary focus on its Bigstone property located in the Deep basin in north-west Alberta. The company’s assets include a working interest in a total of 117 gross (76 net) sections of undeveloped and partially undeveloped land in the Montney formation, with sweet natural gas producing assets in the shallower Cretaceous Gething formation. As of December 31st, 2020, the total proved (1P) reserves attributable to the company were approximately 27.5 million barrels of oil equivalent (MMboe), while proved plus probable (2P) reserves were approximately 54.4 MMboe. The company’s average daily production during 2020 was approximately 6,657 barrels of oil equivalent per day (boe/d), of which approximately 56% was gas.

The pro-forma combined entity will have approximately 529,000 acres of land located in three premier North American upstream plays, including approximately 148,000 acres of Montney land, approximately 320,000 acres of Duvernay land, and approximately 61,000 acres of Clearwater land, with total daily production of approximately 16,000 boe/d, during Q1-2021.

“The arrangement results in an entity that is much simpler in its management and ownership structure making it more efficient and nimble and well-suited to attract investors and deliver strong performance to its shareholders. The combined company, with its quality assets and experienced and respected management team, is an excellent platform to continue consolidating high quality property in the region,” said Timothy Schneider, Chairman of Distinction.

Calgary-based Kiwetinohk Resources is focused on the acquisition and development of oil & gas assets in western Canada, with a primary focus on the East Duvernay shale.

Peters & Co. is acting as financial advisor to Kiwetinohk Resources, while ATB Capital Markets is acting as financial advisor to Distinction Energy.

The transaction is subject to shareholder and court approvals, and is expected to be completed during Q3-2021.

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