Whitecap Resources Inc. (
TSX: T.WCP) said that it has entered into an agreement to purchase certain strategic light oil assets located predominantly in its core Valhalla and Garrington operated areas of Alberta for total consideration of $173.6 million.
The acquisition adds 2,900 barrels of oil per day, made up of 56% oil and natural gas liquids, of high netback, low base decline production (16% current decline rate) in areas where Whitecap already operates 96% of the production.
According to the
Whitecap press release, the acquisition will be funded through a concurrent $170 million bought deal financing and Whitecap's existing credit facilities.
The light oil acquisition continues to solidify and strengthen Whitecap's long-term sustainability while maintaining focus on our current core areas.
The acquisition consists of increasing the company’s working interest in existing operated oil pools and associated infrastructure in areas where Whitecap has significant technical expertise.
In 2014, it is estimated that production from the acquisition will increase to an average of 3,200 barrels of oil per day from its current 2,900 barrels of oil per day and after planned capital expenditures on the acquired assets of $22 million, will generate total cash flow of $40.9 million, leaving significant accretive free cash flow of $18.9 million to Whitecap.
Whitecap is an exploration, development, and production company focused on oil and natural gas properties in western Canada.
On Thursday, Whitecap rose 2.64% and was trading at $10.50 a share. The company had a market cap of $1.6 billion, based on 147.6 million shares outstanding.