Recently it has been announced that Whitecap Resources Ltd. is all set to buy Beaumont Energy Inc., the Saskatchewan light oil producer. The sources revealed that the deal is finalized at US$517 million, both in stock and cash. The deal, experts say is planned to capitalize on the consumer’s market for energy assets following the languishing crude oil prices.
In order to capitalize on the present market trends, Whitecap has also issued equity worth US$110 million. Industry experts are of the opinion that the decision for issuing equity was taken in rush of purchased deals across the Energy Sector.
The total value of the deal is worth US$587 million including the projected Beaumont’s debt of US$70.5 million. With the successful completion of the deal Whitecap’s operation will extend to the Viking’s region in western Saskatchewan, as well.
As per the terms of agreement, shareholders at Beaumont can have claim in only 0.4% of the total shares held by Whitecap. The Beaumont shareholders however, will enjoy the option of taking cash up to a maximum limit of US$103.4 million. The transaction will spur the Whitecap share value to US$14.05 each.
Whitecap, with Grant Fagerheim as its Chief Executive Officer is one of the very few companies in the industry that has showcases the financial capability and has the asset to withstand the collapse in the current oil prices as well as capitalize on the weaknesses faced by the other segments of the sector.
Whitecap is planning to increase its daily production limit by almost 3,700 barrels per day. If Whitecap is successful in pulling off its ambitious targets then the company will increase its overall output by almost 10 per cent to 39,700 barrels by the end of this year.