Strathcona Resources and Pipestone Energy Corp have entered into a definitive agreement, pursuant to which Strathcona will acquire all of the issued and outstanding common shares of Pipestone for 100% share consideration. Upon closing of the Transaction, Strathcona will become a public reporting issuer in Canada.
Strategic Transaction Rationale for Pipestone Shareholders:
The Pipestone Board and management team view this transaction as being in the best interests of Pipestone shareholders. The Company has grown its production rapidly since inception, developing an economically attractive asset base. This all-share combination provides Pipestone shareholders with a meaningful ownership stake in a large, low-decline rate, oil-weighted producer with more than 35 years of highly economic development inventory and significant tax shelter to optimize future growth.
- Continued Ownership Stake in a Highly Differentiated Producer: The combined company will have three core areas, each with meaningful scale and inventory, and a balance of heavy oil, condensate / NGLs and natural gas production. The combined company will be strongly positioned against other large oil-weighted Canadian producers on production growth rate, netback, reserve life and free cash flow generation;
- Achieves the Size and Scale Required for Market Relevance: The Combination is a compelling opportunity to create the fifth largest liquids producer in Canada measured by production and reserves, significantly increasing market relevance, which is expected to garner incremental institutional investor interest and drive increased long-term value for Pipestone shareholders;
Dustin Hoffman, Pipestone COO and interim CEO, stated, “The acquisition of Pipestone by Strathcona reflects the successful culmination of growing and delineating our asset base over the past four years. This all-share transaction delivers shareholders ongoing exposure to one of the largest, well diversified, upstream producers in North America, which has the capacity to grow its production meaningfully over the next decade.”
Gord Ritchie, Chairman of the Board of Directors of Pipestone, commented, 'We are excited to be combining Pipestone with Strathcona, creating a new Canadian oil and gas champion with long-life reserves, significant growth potential, and low sustaining breakevens. We are proud to have grown Pipestone from 152 boe / d to 35,162 boe / d in just four short years, and now the combination with Strathcona allows Pipestone shareholders to share in future growth and value creation for decades. This transaction is the culmination of a thorough strategic review conducted by the special committee of the board of the directors of Pipestone which concluded that the combination with Strathcona created the strongest value creation opportunity for Pipestone shareholders versus both the status quo and other available alternatives.'
Strathcona-PIPE – Company Overview Presentation
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Source: Strathcona Resources
