Calgary-based Tamarack Valley Energy Ltd will acquire Deltastream Energy Corp in a CAD$1.425-billion (nearly US$1.1 billion) deal that renders it the largest producer in the Clearwater unconventional heavy oil play in Canada's Alberta province.
The acquisition will add 23,000 barrels per day of oil equivalent to Tamarack's production next year, according to the company.
"With this transaction, Tamarack will become the leading public Clearwater business, with an exceptional combined asset base," Bill Slavin, Managing Director, ARC Financial, which owns 85% of Deltastream, said.
Deltastream is a pure play on Clearwater, a new shale oil play where development began only six years ago. The play has been characterized by rapid growth in those six years, with production reportedly rising from 4,300 bbl/d in 2017 to some 60,000 bbls/d in 2021 and estimates of 70,000 bbls/d by the second quarter of this year, according to JW Energy.
The deal will see Tamarack acquire Deltastream for $825 million in cash, $300 million as a deferred acquisition payment and $300 million in equity, which includes 80 million Tamarack shares, according to a press release.
Clearwater is eyed by investors due to economics that promise a fast payout of less than six months under today's oil prices, with Tamarack Valley CEO Brian Schmidt calling it the most economic oil play in North America.
"Deltastream brings scale and a leading economic development drilling inventory, comprised of high quality, long life assets with low sustaining capital requirements that enhance capital allocation flexibility," Schmidt said in the release.
Tamarack has been rapidly expanding its footprint in Clearwater, and this latest deal follows one in April that saw the company enter into an agreement to acquire privately owned Rolling Hills Energy Ltd, for ~$74 million. That deal positioned Tamarack for drilling rights covering upwards of 590 square miles.
By Charles Kennedy for Oilprice.com
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