Canadian oil and gas companies Whitecap Resources and TORC Oil & Gas have inked an all-stock merger deal worth nearly CAD 900 million ($703.4 million) to create a light oil weighted producer in Western Canada, valued at $3.12 billion.

As part of the deal, Whitecap Resources will assume TORC Oil & Gas’ net debt of CAD 335 million ($261.8 million).

TORC Oil & Gas, which is based in Calgary, is focused on light oil operations across southeast Saskatchewan in addition to the Cardium development project in central Alberta, and the Torquay/Three Forks resource play in southeast Saskatchewan.

On the other hand, Whitecap Resources is engaged in creating a light oil resource base. The company’s operations are confined currently to Alberta, Saskatchewan, and British Columbia.

Whitecap Resources is also the operator of a carbon capture and utilization storage project called Weyburn Unit in Southeast Saskatchewan.

Recently, the company signed a deal worth around CAD 155 million ($121.15 million) to acquire NAL Resources, a Canadian oil and gas company, from Manulife Financial.

Through the acquisition of TORC Oil & Gas, Whitecap Resources expects to significantly ramp up its scale and dominance in its core area as the former’s asset base fits directly into its current core areas.

The enlarged firm is projected to become one of the largest pure play conventional light oil producers in Canada with a production of over 100,000 barrels of oil equivalent per day (boe/d), of which 78% will be oil and natural gas liquids.

Commenting on Whitecap Resources acquisition of TORC Oil & Gas, Grant Fagerheim – “We are combining two strong Canadian energy producers to form a leading large-cap, light oil company geared towards generating sustainable long-term returns for shareholders while prioritizing responsible Canadian energy development.

“Despite the challenging conditions and significant volatility throughout the year, we have become an even stronger and more resilient energy producer entering 2021 with the combination with TORC as well as the NAL transaction announced on August 31, 2020.

“We would like to thank our employees for their continued exemplary efforts and our shareholders for their ongoing support. We look forward to advancing returns to our shareholders into the future.”

According to the terms of the deal, shareholders of TORC Oil & Gas will exchange each of their shares in the company for 0.57 of Whitecap Resources’ shares.

Whitecap Resources acquisition of TORC Oil & Gas is being supported by the Canada Pension Plan Investment Board (CPP Investments), which has held a stake in the latter since 2013.

Brett Herman – TORC Oil & Gas President & CEO, commenting on Whitecap Resources acquisition of TORC Oil & Gas, said: “On behalf of TORC’s management and Board of Directors, we would like to thank our shareholders for their ongoing support over the past ten years. We believe our corporate values are closely aligned with Whitecap’s management team and the announced business combination will create an exceptionally resilient energy producer that is positioned for growth, while delivering a sustainable dividend to shareholders.

“In a market environment that is increasingly favouring size and scale, a business combination with Whitecap exposes TORC shareholders to a larger platform while remaining consistent with our existing philosophy of balancing growth with financial discipline along with prudent capital allocation. We are pleased to become shareholders of Whitecap.”

Whitecap Resources acquisition of TORC Oil & Gas is expected to be closed by late February 2021 should it secure the necessary regulatory and shareholder approvals, and fulfil other customary conditions.

  Brett Herman, Canada, Canada Pension Plan Investment Board, Grant Fagerheim, TORC Oil & Gas, Whitecap Resources