Page 6 - NorthAmOil Week 45 2021
P. 6

NorthAmOil                                    INVESTMENT                                          NorthAmOil


       CNRL to acquire Storm




       Resources for $762mn




        WESTERN          CANADIAN Natural Resources Ltd (CNRL) has  to continue to execute similar opportunistic
        CANADA           struck a deal to acquire Montney shale gas pro-  acquisitions as a net buyer as absolute debt trends
                         ducer Storm Resources. CNRL, Canada’s largest  below CAD15bn,” a National Bank analyst,
                         oil and gas producer, will pay CAD6.28 ($4.99)  Travis Wood, said in a research note. He added
                         per share in cash for Storm, also assuming its  that he anticipates the company seeking to buy
                         CAD186mn ($148mn) debt. This puts the value  out minority stakes held by Chevron and Royal
                         of the transaction at CAD960mn ($762mn).  Dutch Shell in the Athabasca oil sands project.
                           The deal will expand CNRL’s footprint in the   The Storm acquisition will give CNRL an
                         Montney play, which spans Alberta and British  additional  136mn cubic feet (3.9mn  cubic
                         Columbia. It comes after the company said that  metres) per day of natural gas production and
                         it would soon bring its absolute debt down to  5,600 barrels per day (bpd) of natural gas liq-
                         CAD15bn ($11.9bn), and that once it was below  uids (NGLs). This comes as natural gas prices
                         this figure, it would use additional cash “for stra-  continue to stay strong, and Wood said the addi-
                         tegic growth/acquisition opportunities”.  tional gas production “adds a partial hedge as it
                           While CNRL has not yet hit its debt target,  relates to oil sands fuel operating costs”, because
                         it anticipates doing so in the fourth quarter of  gas is used to either heat or power oil sands
                         the year, before the acquisition closes. Last week,  projects.
                         the company said its long-term debt was at just   “This acquisition provides existing produc-
                         under CAD15.8bn ($12.5bn). It is clear that with  tion and infrastructure that complements our
                         the debt target in sight, CNRL is already on the  current assets in the area,” CNRL’s president, Tim
                         lookout for acquisition opportunities, with more  McKay, stated. “These operating areas provide
                         expected to follow.                  opportunity for synergies within our current
                           “Looking ahead, we expect Canadian Natural  diversified portfolio.”™







       RIL exits Eagle Ford



       with sale to Ensign





        TEXAS            INDIA’S Reliance Industries Ltd (RIL) is exiting  (858-square km) position in the play for $1.15bn.
                         the US shale industry via a sale of its assets in   Downturns in oil and gas prices since the
                         the Eagle Ford play in Texas to Ensign Natural  Indian company entered US shale had affected
                         Resources. The deal comes after RIL also sold its  the economic viability of those projects and led
                         position in Pennsylvania’s Marcellus shale earlier  it to sell off those assets this year – despite prices
                         this year for $250mn.                now picking up again.
                           The price tag for the new transaction has not   For Ensign, meanwhile, the transaction helps
                         been specified. However, RIL said it was sell-  it to build scale in the Eagle Ford. After the trans-
                         ing the Eagle Ford position “at a consideration  action closes, it will own and operate roughly
                         higher than the current carrying value of the  130,000 acres (526 square km) in the core of
                         asset”. According to Ensign, the sale includes  the Eagle Ford, with output approaching 40,000
                         62,000 acres (251 square km), spanning Texas’  boepd. It said this would make it one of the pre-
                         Bee, DeWitt, Karnes and Live Oak counties, and  mier private operators in the play.
                         current net production of around 18,000 barrels   “Through our efforts over the last three years,
                         of oil equivalent per day (boepd).   we have created an asset that generates signifi-
                           The US company added that the transac-  cant free cash flow and has a deep inventory of
                         tion would increase the ownership in leases  highly economic well locations in the core of the
                         and wells it had acquired from Pioneer Natural  Eagle Ford shale,” stated Ensign’s president and
                         Resources in 2019 and Newpek in 2020 to 100%.  CEO, Brett Pennington.
                         RIL entered the Eagle Ford in 2010 by acquir-  Ensign is funded through Warburg Pincus
                         ing a 45% stake in Pioneer’s 212,000-net acre  and the Kayne Private Energy Income Funds.™



       P6                                       www. NEWSBASE .com                      Week 45   11•November•2021
   1   2   3   4   5   6   7   8   9   10   11