Topaz Energy To Acquire Reserve Royalty, Charlie Lake Royalty

Topaz Energy Corp. (TSX: TPZ) announced this morning that it has entered into a definitive agreement to acquire Reserve Royalty for approximately $26.0 million. The company also provided updates on its previously announced plan to acquire Charlie Lake Royalty for $32.0 million. 

The $26 million acquisition price of Reserve Royalty is payable through the issuance of 1,794,886 Topaz shares. On the other hand, the agreement entered with Tamarack Valley Energy Ltd. to purchase the Charlie Lake Royalty for $32 million will be paid in cash consideration.

The acquisition of Reserve Royalty adds 345,000 gross acres of developed and undeveloped fee mineral title and royalty interest lands to Topaz Energy’s portfolio, with the lands located in Western Canada. Reserve Royalty generated royalty production of 609 boe/d (141 bbl/d crude oil, 2.2 mmcf/d conventional natural gas, and 103 bbl/d natural gas liquids) and revenue of $1.6 million during the first quarter of 2021.

On acquiring Charlie Lake Royalty, Topaz Energy will now get a newly created 2% gross overriding royalty interest on crude oil, conventional natural gas, and natural gas liquids from the approximately 300,000 gross acres of Charlie Lake. Tamarack reported that average royalty production during March 2021 exceeded 13,000 boe/d (approximately 7,410 bbl/d crude oil, 22.6 mmcf/d conventional natural gas, and 1,820 bbl/d natural gas liquids) and expects it to maintain between 12,000 and 13,000 boe/d through future capital development.

Topaz Energy estimates its 2021 EBITDA to be boosted by $9.1 million or $0.06 per share, which represents 5% growth, as a result of the two acquisitions. For 2021 the company expects $41.0 – $43.0 in annualized EBITDA, which is to grow to $46.0 – $48.0 million in 2022. The company also anticipates its adjusted working capital following the Charlie Lake Royalty acquisition to be in excess of $60.0 million.

Both the acquisitions are expected to close during the second quarter of 2021, subject to customary conditions.

Topaz Energy Corp. last traded at $14.49 on the TSX.

Information for this briefing was found via Sedar and the companies mentioned. 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.

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