Both transactions demonstrate that management teams in the domestic oil and gas industry believe size and scale will enable them to access capital and funding at a time when smaller producers struggle to attract financing from banks and financial institutions, Zuk wrote.
Loukas wrote that his company’s board “has been prepared to immediately engage in substantive discussions and work expeditiously and collaboratively with Bonterra towards the announcement of a mutually beneficial combination transaction since June.”Obsidian says it’s prepared to offer two of its own common shares for each share of Bonterra in an all-stock transaction that would leave Bonterra shareholders with 48 per cent of the combined company.
Obsidian shares rose 15 per cent Monday after the letter was released to reach 60 cents each on the Toronto Stock Exchange, bringing the company’s market cap to $45 million. Bonterra, by contrast, traded flat at $1.50 per share on the TSX and has a market cap of around $50 million. “Given the significant equity appreciation that would result from a combination between our companies, we feel strongly that engaging with Obsidian Energy is a far better outcome for Bonterra shareholders than the pursuit of incremental second-lien debt financing from the Business Development Bank of Canada,” Loukas said in the letter.
In a release, Whitecap announced that NAL’s lands and production base overlaps with its own properties in Alberta and Saskatchewan. The deal will boost Whitecap’s total production next year to as much as 83,000 barrels of oil equivalent per day from from 60,000 boepd currently.