Surge Energy has entered into an agreement with Longview Oil to acquire all of the issued and outstanding common shares of Longview for C$429 million (US$388 million). The purchase price is inclusive of Surge's previously announced acquisition of 9.3 million Longview common shares, representing 19.8% of the common shares outstanding, at C$4.45 per share.
The combined company will be focused on the Williston Basin and Central Alberta, and will hold over 1.8 Bbbl of light and medium gravity original oil in place.
Under the agreement, Surge has agreed to acquire all of the Longview common shares at an exchange ratio of 0.975 of a Surge common share for each Longview common share. Surge will also assume an estimated C$155 million of Longview debt (including transaction costs) upon completion of the transaction.
Paul Colborne, President and CEO of Surge, stated: "We believe that this transaction is an exciting opportunity for both Surge and Longview shareholders. Shareholders in the combined company will participate in one of the elite, light and medium oil, dividend-paying, growth companies in Canada, and receive a significant dividend increase, while benefiting from Surge's peer group leading "all-in" sustainability ratio, and an excellent balance sheet."
In November 2013, Surge acquired oil producing assets located near Wainwright, Central Alberta for a cash consideration of C$76.8 million (US$74 million).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.