Baytex Energy to acquire Eagle Ford shale operator Ranger Oil for $2.5bn

Canadian oil and gas company Baytex Energy has agreed to acquire Eagle Ford shale operator Ranger Oil Corporation in a cash and stock deal worth around $2.5 billion, including the latter’s net debt of $650 million.

Under the terms of the deal, Ranger Oil’s shareholders will exchange each of their shares for 7.49 shares of Baytex Energy and $13.31 in cash.

Upon closing of the deal, Baytex Energy’s shareholders will own a stake of around 63% in the enlarged company, while Ranger Oil’s shareholders will own around 37%.

Darrin Henke — Ranger Oil President and CEO said: “We expect that combining with the balance sheet strength, deep asset base, and operational excellence of Baytex will create a unique company of scale which will deliver sustained free cash flow growth and differentiated shareholder returns.

“We look forward to bringing together our complementary teams and assets to realize the long-term value of this combination for our shareholders.”

Baytex Energy to acquire Eagle Ford shale operator Ranger Oil for $2.5bn. Image courtesy of Egonetix_xyz from Pixabay.

Based in Houston, Ranger Oil develops and produces oil, natural gas liquids (NGLs), and natural gas in the Eagle Ford shale in south Texas.

Its acquisition gives Baytex Energy access to 741 net undrilled locations representing an inventory life of 12-15 years.

Ranger Oil has an acreage of 162,000 net acres in the crude oil window of the Eagle Ford shale, spanning mainly in Gonzales, Fayette, Lavaca, and Dewitt counties. The acreage is said to be on-trend with the non-operated position of Baytex Energy in the Karnes Trough.

Through the acquisition, Baytex Energy will be adding 67-70Mboe/d of production, that is 96% operated and is predominantly light oil.

Eric T. Greager — Baytex Energy President and CEO said: “The Ranger acquisition is strategic. We are acquiring a strong operating capability in the Eagle Ford, on-trend with our non-operated position in the Karnes Trough and driving meaningful per-share accretion on all metrics.

“The transaction more than doubles our EBITDA and nearly doubles our free cash flow. The Ranger inventory immediately competes for capital in our portfolio and brings 12 to 15 years of quality oil-weighted drilling opportunities.”

Approved unanimously by the boards of the two firms, the deal is likely to close late in Q2 2023. The deal is subject to various conditions, including the approval of Ranger Oil’s shareholders, and is already backed by affiliates of Juniper Capital Advisors, which hold a combined 54% stake in the oil and gas company.