Tourmaline to Acquire Black Swan Energy in C$1.1 B Deal
TSX-listed Tourmaline Oil Corp. has entered into a definitive agreement to acquire privately-held Black Swan Energy Ltd., in an all-stock transaction valued at approximately C$1.1 billion, including the assumption of debt.
Under the terms of the deal, the consideration is comprised of approximately C$798.2 million payable via the issuance of 26 million Tourmaline common shares (valued at C$30.7 per share based on the company’s closing share price on June 10th). In addition, Tourmaline will assume up to a maximum of C$350 million of Black Swan net debt, including all transaction costs.
Alberta-based Black Swan currently holds approximately 230,000 net acres of Montney rights at Laprise, Beg, Jedney and Sojer areas of Northeast British Columbia, with 1,600 Montney horizontal drilling locations in the Aitken core development area. As of December 31st, 2020, the company reported total proved reserves (1P) of approximately 237.3 million barrels of oil equivalent (MMboe), and total proved plus probable (2P) reserves of approximately 491.8 MMboe. The current average daily production stands at approximately 50,000 barrels of oil equivalent per day (boe/d), of which approximately 77% is gas.
In addition, Black Swan also holds a 50% interest in and operatorship of two new gas plants at Greater Aitken, with an existing capacity of 265 million cubic feet per day (MMcf/d), as well as two water storage ponds with a capacity of 108,000 cu. m.
Pro forma, the combined entity will have a market capitalization of approximately C$9.9 billion after closing, and an estimated combined average daily production of around 500,000 boe/d during 2022.
“The acquisition represents a further important component of the Company’s ongoing North Montney consolidation strategy. Tourmaline envisions the North Montney as the key sub-basin for supplying Canadian LNG, as the Company expects the North Montney to be the primary growth driver in the entire Western Canadian Sedimentary Basin for the next decade. The Black Swan acquisition complements Tourmaline’s core Gundy development and, along with the more recent Polar Star, Chinook, and Saguaro transactions, will establish Tourmaline as the largest current North Montney producer with the most extensive future drilling and project inventory,” the company stated in a press release.
Headquartered in Calgary, Tourmaline is currently focused on three core operating areas in the Alberta Deep basin, the Northeast British Columbia (NEBC) Montney complex, and the Peace River High complex.
Scotia Capital and Stifel FirstEnergy are acting as financial advisors to Tourmaline, while Peters & Co. is advising Black Swan.
The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close in the second half of July.