· Located in Cardium play of north-east British Columbia and north-west Alberta
· Current production of 7.5 MBOE/d (30% liquids)
· 1P reserves of 19.9 MMBOE; 2P reserves of 32.6 MMBOE
· Average production metric of C$43,600/BOE
· Average 1P reserves metric of C$16.43/BOE
· Average 2P reserves metric of C$10.03/BOE
Under the arrangement, Crocotta shareholders will receive a combination of common shares of Long Run as well as common shares and warrants of a newly established Montney-focused exploration company (ExploreCo) to be led by Crocotta's current management team. For each Crocotta share held, shareholders of Crocotta will receive 0.415 of a Long Run share, one common share of ExploreCo and 0.2 arrangement warrants of ExploreCo.
Each arrangement warrant will entitle the holder to purchase one ExploreCo common share at a price of C$1.7 for a period of 30 days following closing of this arrangement. The assets of ExploreCo are excluded from the Long Run acquisition of Crocotta.
This deal marks the second Cardium acquisition of Long Run and follows its purchase of oil and liquids-rich Cardium assets in the Deep Basin and Pine Creek from Crew Energy for $214 million in Apr-2014. The company paid $4,647/Daily Mcfe for production and $200/Acre for Undeveloped Acreage.
This is the second largest deal of 2014 in the Cardium play after Whitecap's $668 million acquisition of Imperial Oil assets.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.