https://www.calgaryherald.com/business/Second+Wave+Energy+block/6224229/story.html
CALGARY — The trend of takeovers in the oilpatch continued Tuesday, with junior producer Second Wave Petroleum announcing it had been the object of unsolicited offers.
The bids have prompted the Calgary-based oil and gas producer with interests in the hot Beaverhill Lake play to “explore strategic alternative,” including a potential sale.
Second Wave joined junior producers Bowood Energy, and natural gas burdened Anderson Energy putting itself on the auction block within the past month.
The company did not name the potential suitors, but Tuesday’s announcement of possible negotiations, plus its reserve update pulled up Second Wave’s stock by 15 per cent during the day.
The company settled up 45 cents at $3.47 per share on the Toronto Stock Exchange.
Second Wave reported an 87 per cent increase in its proved and probable reserves at 10,950 million barrels of oil equivalent, mainly due to increased light-oil drilling in Beaverhill Lake.
The region houses one of Alberta’s oldest oil plays, made new again through multi-stage fracturing and horizontal drilling. The region’s developed infrastructure and access to markets make the region attractive to producers with deeper pockets, noted analysts.
Intermediate producers such as Crescent Point Energy and Pengrowth Energy, already established in nearby Judy Creek and Beaverhill Lake, could be contenders for Second Wave’s assets, said analyst David Doig, with Acumen Capital.
“Second Wave has done its job by proving that resources exist in the (Beaverhill Lake) area. Now the development becomes more conclusive if a big guy gets in,” Doig said.
He estimated Second Wave, currently valued at about $250 million, could fetch a premium of about 50-70 per cent.
However, don’t expect all Alberta junior producers to be flooded by intermediate suitors, said analyst Robert Fitzmartyn, with FirstEnergy Capital Corp.
“The ones that are successfully transacting are in the right commodity, which is oil,” Fitzmartyn said. “The ones that are gassier, like Anderson, are in a process, but that doesn’t mean it will end in a higher bid.”
Alberta still is a gassy basin, he noted, with most junior producers being gas weighted and not attractive at prices hovering around $1.85 per gigajoule.
Second Wave has hired RBC Capital Markets as its financial adviser.
With files from Reuters
domeara@calgaryherald.com
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