Calgary-based Strathcona Resources Ltd. is set to become the fifth largest oil producer in Canada with the planned acquisition of publicly traded oil and gas exploration company Pipestone Energy Corp (TSX: PIPE).
In an all-share deal, the companies will combine to value at $8.6 billion, which Strathcoma claims will position it to have a larger, low-decline rate of production. The merger is also supposed to benefit Pipestone’s shareholders, as it will grant them roughly 9.05% of the fully-diluted pro forma equity in the new entity.
“We’ve been asked by a lot of folks, ‘Why go public?’” said Strathcona executive chairman Adam Waterous during a conference call cited by the Canadian Press. “When you’re private, it’s a much simpler life. There’s less reporting requirements … but I would also say that our view of actually being public is that the sector, in general, is undervalued.”
The deal has already been greenlit by Pipestone’s board, but shareholders’ approval is the final step needed before the expected closure of the transaction early in the fourth quarter of the year.
Pipestone Energy Corp. last traded at $2.48 on the TSX.
Information for this briefing was found via Strathcoma and the Canadian Press. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.