Kiwetinohk announced the acquisition of partner interests (Repsol) at Placid, acquiring net production of 1,200 boe/d for $59 million (net), bringing KEC ownership to 88% (from 60%) across 79,000 acres at Placid. Albeit small, we view the transaction positively, as it consolidates regional ownership and facilities while providing a platform to accelerate Montney development over time. Reiterating Outperform.
Details
Deal summary. KEC will acquire Repsol’s interests at Placid, acquiring production of 1,200 boe/d (55% natural gas), 12.9 mmboe of 2P reserves, and an incremental 14.12% interest in the Bigstone sweet processing facility (updated ownership is now 39.31%, or 31 mmcf/d). Additionally, the deal adds to compression and condensate handling capacity at the 7-11 facility by 25 mmcf/d and 2,750 bbl/d, respectively. The deal will be funded via the company’s existing bank facilities. For maps of the company’s operations and various processing facilities, please see our initiating coverage report here.
Transaction metrics. The deal was completed at transaction metrics of roughly $49,000/boe/d and $4.50/boe (2P), which we see as reasonable in the context of the current marketplace amid recent comparable transactions.