Globe & Mail Quick SummaryIt wouldn't be a suprise that when trading resumes, the SP initially declines as this often happens to the purchaser when one smallcap buys another. But long term, it looks promising. GLTA
09:14 AM EST, 01/23/2023 (MT Newswires) -- Saturn Oil & Gas Inc. (SOIL.V) said over the weekend that it agreed to acquire Ridgeback Resources Inc., an oil and gas producer focused on light oil in Saskatchewan and Alberta, in a $525 million deal.
Consideration comprises $475 million in cash and $50 million in shares. Closing is expected in the first quarter.
The transaction allows Saturn to acquire additional production of 17,000 barrels of oil equivalent per day. Upon closing, the company said it will focus on maximizing free cash flow from pro forma production base of about 30,000 boe/d.
"The attractive acquisition metrics and compelling economics of the Ridgeback acquisition, paired up with our existing portfolio of free cash flow generating assets, will allow Saturn to repay all corporate indebtedness within three years, and ultimately provide a significant return of capital to enhance shareholder value," Saturn CEO John Jeffrey said.
Saturn expects to generate $232 million in free cash flow to reduce net debt to $345 million at year-end 2023.
Following the acquisition, Saturn updated its 2023 guidance, with its pro forma stay flat guidance increasing 117% to 27,170 boe/d.