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Vermilion Energy to acquire Spartan Energy for $1.1bn

EBR Staff Writer Published 17 April 2018

Oil and gas producer Vermilion Energy has agreed to acquire publicly traded Canada-based rival Spartan Energy for C$1.40bn ($1.11bn) in a bid to boost its light oil production capacity in Canada and the US.

Vermilion will acquire Spartan’s assets comprised of light oil producing properties covering approximately 480,000 net acres of land, including 400,000 net acres in southeast Saskatchewan with multi-zone potential.

The firm will also purchase approximately 80,000 net acres of land in other areas of Saskatchewan, Alberta and Manitoba.

Production from the assets is expected to be approximately 23,000 boed during 2018.

Additionally, the Vermilion will acquire ownership and control of producing infrastructure that are synergistic with its existing assets, as well as significant 2D and 3D seismic data.

As per the terms of the arrangement agreement, Vermilion will acquire all of the common shares of Spartan issued and outstanding at the effective time of the arrangement. Spartan shareholders will receive 0.1476 of a Vermilion share for each share held.

Planned to be completed on or about 15 June 2018, the transaction is subject to customary closing conditions, including receipt of applicable court, Spartan shareholder, TSX and NYSE, and other regulatory approvals.

Vermilion said in a statement: “The acquisition of Spartan is a value-adding investment which meets our disciplined M&A criteria.

“The Acquisition significantly increases our position in southeast Saskatchewan, and aligns with our sustainable growth-and-income model by appending high-netback, low decline assets with free cash flow and strong capital efficiencies on future development.”

As part of the deal, Vermilion will offer C$1.23bn ($976.7m) of its own shares and take over C$175m ($138.9m) of Spartan’s debt.

Spartan said in a statement: “Through the Arrangement, Spartan shareholders will continue to benefit from the Spartan asset base while gaining exposure to Vermilion’s high quality, internationally diversified oil and gas portfolio.” 

Earlier this year, Vermilion Energy had signed an agreement to acquire a private southeast Saskatchewan producer for $90.8m.

Image: Vermilion intends to acquire oil and gas assets. Photo: courtesy of Rosemary Ratcliff/ FreeDigitalPhotos.net.