Whitecap Resources has signed an all-stock deal worth around CAD155 million ($118.6 million) to acquire rival Canadian oil and gas company NAL Resources from a fully-owned subsidiary of Manulife Financial.

NAL Resources has oil and gas assets across Alberta and Saskatchewan and is presently producing nearly 27,000 boe/d, of which 55% is oil and natural gas liquids.

Whitecap Resources said that the acquisition is part of its long-term strategy of building up assets in its core operating areas. The Canadian oil producer said that the production and lands of NAL Resources overlap over 80% of its current asset base and as a result offers substantial operational synergies and inventory optimization opportunities across west central Alberta, west central Saskatchewan, and southeast Saskatchewan.

Through the deal, Whitecap Resources expects to boost its exposure to economically compelling plays that are currently operated by it.

Whitecap Resources stated: “The combination between the two companies will position Whitecap to further advance our internal opportunities, as well as our ability to selectively consolidate high-quality assets in our core areas of operation. Our competitive advantages include a strong balance sheet, high funds flow netback assets, a shallow production decline rate and a high-quality drilling inventory to support our fully funded income and growth model.

“We remain committed to growing our business for the long term in combination with providing our shareholders with meaningful cash dividends.”

Manulife Financial will own a stake of around 12.5% of the combined entity.

The deal is anticipated to close in early January 2021, subject to customary conditions, which includes the receipt of the required regulatory approvals, including approval from the Toronto Stock Exchange.

  Canada, Manulife Financial, NAL Resources, Whitecap Resources