WEF merges Cona Resources, Strath Resources to form Strathcona Resources

Waterous Energy Fund (WEF), a Canadian energy investment firm, announced that a couple of its portfolio companies – Cona Resources and Strath Resources have merged to create Strathcona Resources, an oil-weighted producer in North America.

Based in Calgary, Canada, Strath Resources is focused on developing its core oil and natural gas asset in the Kakwa area of Deep Basin in Alberta. The company has working interest and operatorship in more than 400 sections of land, besides owning a gas plant and gathering infrastructure, and midstream arrangements that provide for processing, transportation, and fractionation of its oil and gas assets.

Cona Resources, which is also based in Calgary is into crude oil production and development. The company is a heavy oil producer whose core asset – Cactus Lake, is said to be the largest vertical well polymer flood in North America.

Strathcona Resources, the enlarged firm, will have production of around 60,000 Boe / d (of which 67% is oil and liquids), a 40-year reserve life index, a base oil decline rate of around 10%, and low carbon emissions per barrel.

Rob Morgan – CEO of Strathcona Resources said: “We believe the combined Strathcona business is financially stronger and better positioned to generate sustainable free cash flow than either Strath or Cona on a standalone basis.  I am very excited to be working with the Strath and Cona teams as we continue the excellent work both companies have achieved in optimizing the operational and financial performance of our assets.”

The new company is said to be positioned uniquely with a portfolio of condensate and natural gas production to go alongside its heavy oil operations.

Adam Waterous – Waterous Energy Fund said: “We believe that the Strath and Cona assets fit perfectly together, with Strath’s condensate and natural gas production closely matching Cona’s condensate and natural gas operational requirements.

“Together, Strath and Cona create a premier company with sufficient scale and commodity diversity to withstand the current market volatility and generate substantial free cash flow after sustaining capital expenditures. This transaction fits with WEF’s strategy of acquiring companies with trophy properties in special situations and pursuing an action-oriented value creation plan through recapitalizing, restructuring and repositioning the businesses.”