A major shakeup in the oil industry this morning, with Whitecap Resources and Veren Inc announcing they will be combining in a $15 billion transaction. This new combined company will see Veren and Whitecap operate together under the Whitecap name, with four of the directors of Veren, including the current President and CEO Craig Bryksa, joining the Whitecap Board of Directors.
The merger between the two companies is expected to close before May 31st.
"We are excited to bring together two exceptionally strong asset bases to create one world-class energy producer with one of the deepest inventory growth sets of both liquids-rich Montney and Duvernay opportunities, along with conventional light oil opportunities in some of the most profitable plays in the Western Canadian basin,” Whitecap President and CEO Grant Fagerheim said in a written release. “Our combined company will include exceptional technical and support personnel from the two companies in both the office and field and an experienced Board of Directors that prioritizes sustainable and profitable growth to generate strong returns for our combined shareholders. We look forward to bringing Whitecap and Veren together and providing increased value to both sets of shareholders well into the future."
"This strategic combination unlocks significant value for all shareholders and together positions us as a stronger, more resilient company,” added Veren President and CEO Craig Bryksa. “With enhanced scale, deep inventory, and increased free funds flow generation, we're building a business with a differentiated competitive advantage. Our combined balance sheet reinforces our financial strength and enhanced credit profile, ensuring the long-term success in an evolving market. Together we're unlocking synergies, creating new opportunities, and setting the stage for sustainable growth."
The new combined company will have a value of more than $15 billion, with production of 370,000 boe/d. This company will become the largest Canadian light oil producer and the seventh largest producer in the Western Canadian Sedimentary Basin. There will also be the potential for natural gas growth.
The agreement will see Veren shareholders receiving 1.05 common shares of Whitecap for every share of Veren. When the transaction closes, Whitecap shareholders will have 48 per cent ownership, and Veren shareholders 52 per cent. Monthly dividend payments will continue for Whitecap shareholders, with Veren’s first quarter dividend payout happening as normal. However, there won’t be any further dividends from Veren paid out after the transaction closes.
The transaction still requires some approvals, including the approval of the arrangement by the Court of King’s Bench in Alberta, customary regulatory approval, and approval from the Toronto Stock Exchange.
There is no word at this time what the impacts could be locally for Weyburn and southeast Saskatchewan.
More to come.