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(WO) – Strathcona Sources has agreed to accumulate Greenfire Sources in a cash-and-stock deal valued at about C$2.7 billion to C$2.9 billion (US$1.9 billion to US$2.1 billion), together with Greenfire’s roughly C$550 million (US$392 million) of web debt. The mixed firm might be Canada’s fourth-largest SAGD operator, with greater than 3 billion bbl of proved plus possible (2P) reserves. That’s a 2P reserves life index of 54 years, which Strathcona says is the longest of any publicly traded Canadian firm by about 20 years.
Greenfire shareholders can select both 0.25 Strathcona shares for every Greenfire share, value C$9.09 (US$6.48) or a 15% premium to Greenfire’s Nov. 6 shut, or C$11.00 (US$7.85) in money, a 39% premium. Neither choice is topic to proration. Waterous Vitality Fund (WEF), which owns 72% of Greenfire and 57% of Strathcona, has agreed to help the deal and take shares. Relying on elections, Strathcona expects to concern 43 million to 60 million shares and pay as much as about C$740 million (US$528 million) in money.
The deal brings collectively two long-life oil sands and heavy oil producers that every plan to develop manufacturing 11% to 12% a 12 months over the following 5 years. They plan to do it by drilling to fill current amenities and thru brownfield expansions. Strathcona stated the mixed firm would be the just one with important operations throughout all three main oil sands deposits (Athabasca, Chilly Lake and Lloydminster) and all main producing formations (McMurray, Clearwater and Mannville). It’ll even be the one oil sands operator with out pure gasoline or downstream operations.
Strathcona expects about C$75 million (US$53 million) in annual synergies throughout the first 12 months from decrease borrowing prices, procurement efficiencies and the elimination of duplicate public firm prices. Greenfire’s C$2.8 billion (US$2.0 billion) of tax swimming pools are anticipated to increase Strathcona’s money tax horizon from 2027 to 2031 at US$75/bbl WTI, saving about C$400 million (US$285 million) in money taxes over 4 years.
Greenfire’s management group, led by president Colin Germaniuk, will run its belongings as a brand new semi-autonomous enterprise unit, SCR Central Athabasca. It joins Strathcona’s current Chilly Lake, Lloydminster Thermal and Lloydminster Typical items.
The deal comes a 12 months after Strathcona ended its takeover bid for MEG Vitality, which agreed to a cope with Cenovus as an alternative.