Page 4 - NorthAmOil Week 31 2022

NorthAmOil COMMENTARY NorthAmOil

Strathcona to acquire Serafina

in its largest deal yet

Privately owned Strathcona Resources is reportedly acquiring Serafina Energy

for $1.8bn, which would represent its largest deal to date

WESTERN CANADA’S privately owned Strathcona solid despite the acquisition being entirely debt
CANADA Resources is acquiring Serafina Energy for funded because Strathcona will use free cash
CAD2.3bn ($1.8bn), according to multiple flow to reduce debt.”
WHAT: reports. The companies have not yet issued offi-
Strathcona Resources is cial announcements, but the acquisition was Acquisition spree
acquiring Serafina Energy reported by sources with knowledge of the mat- The acquisition is reported to be the biggest yet
for $1.8bn, according to ter that were cited by outlets including Reuters by Strathcona, which has been on a buying spree
multiple reports. and Bloomberg. since its formation in 2020. Indeed, the com-
Additionally, the transaction was mentioned pany is reported to have been among the top
WHY: by credit rating agency Moody’s, which said buyers of oil and gas assets in Canada, and has
Like other oil and gas Strathcona and Serafina had entered into a deal most recently been hoping to profit from higher
players, Strathcona wants on July 27. crude prices in the wake of Russia’s invasion of
to benefit from higher oil According to Moody’s Strathcona had agreed Ukraine.
prices. to acquire all of the outstanding shares of pri- Strathcona, which is owned by owned by
vate-equity-backed Serafina using cash. A pay- Waterous Energy Fund, said in March that it
WHAT NEXT: ment of CAD1.9bn ($1.5bn) is due to be made had agreed to buy Caltex Resources. This came
Many companies remain upon closing of the transaction on August after it had agreed to acquire Alberta’s Tucker
focused on shareholder 29. Four deferred payments of CAD100mn thermal oilfield assets in January.
returns for now instead ($77mn) each will also be due at the end of Sep- The company had previously said its
of directing cash tember, October, November and December. strategy was to buy assets that would give
flow towards raising “The affirmation and maintenance of the it options to add output organically. In this
production. positive outlook reflects Strathcona’s sizable instance, its acquisition of Serafina comes
production and reserve base pro forma for the with 40,000 barrels of oil equivalent per day
complimentary Serafina acquisition,” a Moody’s (boepd) of thermal heavy oil output in the
analyst, Paresh Chari, stated. “The affirmation Lloydminster region of Saskatchewan. Sera-
also reflects that financial leverage will remain fina had commanded a “strong price” for the

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