Headwater Exploration acquires Cenovus’ Marten Hills oil assets for $78m
Cenovus Energy has completed the previously announced CAD100 million ($78.2 million) sale of its Marten Hills oil assets in Alberta, Canada to rival Canadian oil and gas company Headwater Exploration.
As per the deal announced last month, Headwater Exploration paid Cenovus Energy CAD35 million in cash, while issuing 50 million of its common shares plus 15 million share purchase warrants.
Each warrant will entitle the holder to acquire a common share in Headwater Exploration for a period of three years at an exercise price of CAD2 per share.
As a result of the transaction, Cenovus Energy will hold a stake of around 26% in Headwater Exploration.
Through the deal, Headwater Exploration acquired a 100% stake in nearly 2,800 barrels per day of medium gravity oil production and also rights to 270 net sections in the Clearwater oil play.
Neil Roszell – Headwater Exploration Chairman and CEO said: “We are extremely pleased to have obtained a strategic investor and business partner with Cenovus. Our common goals of developing and maximizing the value associated with this enviable position in the prolific Clearwater play have aligned us on all key business principles.”
The two companies had also signed a gross overriding royalty (GORR) agreement that provides Cenovus Energy the scope to benefit from future development of the Clearwater formation at the Marten Hills oil assets.
At the time of signing the deal, Headwater Exploration had committed to invest a minimum of CAD 100 million ($78.2 million) on the acquired lands by the end of 2022.
Kam Sandhar – Cenovus Energy Conventional Senior Vice-President said: “We look forward to working with Headwater’s highly respected management team as they begin to develop these top-quality oil assets at Marten Hills.
“This is a unique opportunity to get capital and expertise to work right away on a promising portfolio that was unlikely to receive near-term funding from Cenovus, and we believe the closing of this transaction will provide compelling long-term value for Cenovus shareholders.”
The sale of the Marten Hills oil assets follows the CAD 3.8 billion ($2.9 billion) signed by Cenovus Energy in October 2020 to acquire rival Canadian oil and gas company Husky Energy. (Read more about Cenovus Energy acquisition of Husky Energy here)