Baytex Energy to acquire rival Canadian oil and gas producer Raging River for $2.1bn

Energy acquisition news : Canadian oil and gas producer Baytex Energy has agreed to acquire its rival Raging River Exploration in a deal worth CAD2.8 billion ($2.13 billion) to create a top oil-weighted producer with a total enterprise value of nearly CAD$5 billion ($3.78 billion).

Baytex Acquisition of Raging River

After the completion of the Baytex acquisition of Raging River, the combined company, which will operate under the Baytex name, is expected to feature a high quality asset base across North America and unique portfolio of future catalysts.

The average annual production of the combined company for 2019 after the Baytex acquisition of Raging River has been estimated to be 100,000-105,000 boe/d, of which 85% will be oil and natural gas liquids. It will have an exploration and development capital program of CAD750-850m ($567.7-643.4m), which is expected to yield a production growth of 5% to 10%.

Following the Baytex Raging River merger, the combined company will boast of more than 260,000 acres in the East Duvernay Shale oil play in Alberta where recent exploration had validated the prospectivity of the acreage.

Overall, the combined company will have a diverse portfolio of high quality oil assets made up of Viking, Lloydminster, Peace River and East Duvernay Shale in Canada and the Eagle Ford in the US state of Texas.

Representative image of onshore oil production. Photo by Zbynek Burival on Unsplash.

Commenting on Baytex acquisition of Raging River, Edward LaFehr – President and CEO of Baytex, said: “We believe the combined company will deliver a powerful combination of industry-leading returns, attractive production growth and strong free cash flow generation.

“The merger creates a company with world class assets and a strong balance sheet while retaining substantial torque to higher crude oil prices. We will be well-positioned to optimize our capital investment program across our high rate of return asset base. The combined company has a dominant 260,000 net acre position in the emerging East Duvernay Shale oil play which has the potential to compete for capital with the best plays in North America.”

As per the terms of the all-stock deal, shareholders of Raging River Exploration will receive 1.36 common shares of Baytex directly or indirectly in exchange of each share they own in the former.

Neil Roszell – Executive Chairman and CEO of Raging River, commenting on Baytex Raging River merger, said: “We are uniting two strong oil companies with exceptional people and assets. This combination creates a diversified, well-capitalized oil producer that has an impressive suite of high quality producing assets and the ability to materially advance our East Duvernay Shale light oil opportunity, while continuing to develop our Eagle Ford, Viking, Peace River and Lloydminster core assets.

“The combination provides a substantial value proposition for all shareholders of Raging River and Baytex incremental to what each company could deliver on its own. The combination with Baytex is an excellent outcome to the comprehensive strategic process undertaken by the Raging River Board.”

The board of directors on either side has agreed unanimously on Baytex acquisition of Raging River, which is expected to be completed in August 2018. The Baytex Raging River merger for its completion would need to be approved by the shareholders on either side apart from getting approvals from Court of Queen’s Bench of Alberta and certain regulatory bodies and authorities.