Tourmaline Oil (TSX: TOU) this morning continued its strategy to consolidate the BC Montney region, announcing a transaction to acquire Crew Energy (TSX: CR) for $1.3 billion.
The transaction, to take place in the form of shares and the assumption of $240 million in net debt, will see Crew Energy shareholders receive 0.114802 Tourmaline shares for each share of Crew Energy held. The figure values current shares of Crew Energy at roughly $6.69, a premium of roughly 72% to Friday’s closing price.
For Tourmaline, the acquisition is said to be immediately accretive, adding over $200 million to expected 2025 free cash flow, while adding 29,000 to 30,000 boepd of base production to its portfolio, along with reserves of 473.2 million boe.
Tourmaline has also stated that the Groundbirch development project, including a deep cut gas processing facility, has the potential to double the current production base. Annual free cash flow from the Crew assets is expected to climb to $350 to $400 million per year following the completion of Groundbirch, equating to $1 of free cash flow per share on a pro forma basis.
In terms of inventory, the Crew drilling inventory is believed to add an estimated four years of Tier 1 locations to Tourmaline’s existing inventory, with over 700 Tier 1 locations added. On a post-transaction basis, Tourmaline is now said to have over 20 years of Tier 1 inventory, and over 75 years of total inventory.
The transaction is so strong from Tourmaline’s viewpoint that it has announced a 6% increase to its quarterly dividend, hiking it to $0.35 per share from $0.33, with the dividend expected to be declared in September.
Tourmaline’s acquisition of Crew Energy is currently slated to close in early October 2024.
Tourmaline Oil last traded at $58.28 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
