The $ 2 billion deal, two companies are looking for a strategic solution that combines the crude-oil and liquid-intensive production of Seven Generations with the gas-driven production of ARC

CALGARY – Canada’s ARC Resources Ltd on Wednesday agreed to buy Seven Generations Energy Ltd for $ 2.7 billion ($ 2 billion) in an all-stock deal to create the country’s sixth largest energy company since the Oil producers strive to increase and decrease costs

The combined company will become the largest operator in Western Canada’s premier Montney slate game, producing more than 340000 barrels of oil equivalent per day (boepd) The deal underscores the rapidly changing landscape of the energy sector as oil companies are under pressure to gain capacity to make them more attractive to lenders and investors
The combined company will be Canada’s largest condensate producer and third largest natural gas producer, trading as ARC Resources Ltd, and will continue to be headquartered in Calgary, including debt, and the deal is valued at $ 8 billion

In the merger, two companies are looking for a strategic solution that combines the crude oil and liquid-intensive production of Seven Generations with the gas-oriented production of ARC, said Mark Oberstoetter, head of Canadian upstream research at consultancy Wood Mackenzie

“This is a company that wants to become bigger and more attractive to a different class of investors. They’ve pushed into this next realm,” added Oberstoetter

The vast Montney Shale Game stretches across northeastern British Columbia and northwestern Alberta and is believed to have about half of the recoverable resources of the entire oil sands region

It is currently producing 1.5 million barrels of oil equivalent per day, including 45 percent of Western Canada’s gas supply, according to Wood Mackenzie

Canadian oil and gas companies struggled last year when the coronavirus pandemic weighed on demand, but oil prices have rebounded in 2021 amid optimism about vaccine adoption and concerns about a supply shortage

“The transaction will create a combined material size and size company that will enhance the existing commodity and geographic diversification of ARC and Seven Generations,” said a statement from the companies

The Canada Pension Plan Investment Board (CPPIB), the country’s largest pension fund that controls 168 percent of Seven Generations’ shares, has agreed to vote in favor of the deal, the companies said the deal is expected to close early in the second quarter

Under the terms of the definitive agreement, Seven Generations shareholders will receive 1,108 common shares of ARC for each common share held in Seven Generations valued at $ 2.74 billion. Upon completion, seven shareholders will own 51 percent of the combined company

The transaction is expected to have an immediate positive impact on all shareholders based on free flow of funds and net asset value per share, the companies also expect to see annual cost savings of $ 110 million by 2022

“One of the perks of doing business is that the two companies think very similarly and have two high quality asset bases The merger gives us scalability and financial strength, “said Terry Anderson, CEO of ARC, to analysts on Wednesday

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ARC Resources

World News – CA – ARC Resources Acquires Seven Generations to Create Canada’s Sixth Largest Energy Company

Source: https://financialpost.com/pmn/business-pmn/canadas-arc-resources-agrees-to-buy-seven-generations-for-2-2-bln