Whitecap, Veren to Merge in $10.4MM Transaction

Whitecap Resources Inc. and Veren Inc. are merging to “create a leading light oil and condensate producer” with concentrated assets in Alberta’s Montney and Duvernay formations.

The companies have entered into a definitive business combination agreement to combine in an all-share transaction valued at approximately ($10.43 billion) CAD 15 billion, inclusive of net debt, they said in a news release. The transaction is expected to close before May 30, subject to approval of the arrangement by the Court of King’s Bench of Alberta as well as other customary closing conditions.

Under the terms of the agreement, Veren shareholders will receive 1.05 shares of Whitecap for each Veren share held. The combined company will be led by Whitecap’s existing management team under the Whitecap name with four Veren directors joining Whitecap’s board, including the current President and CEO of Veren, Craig Bryksa.

The combined company will have 370,000 barrels of oil equivalent per day (boepd) of corporate production with significant overlap across both unconventional and conventional assets and will become the largest Canadian light oil focused producer and the seventh largest producer in the Western Canadian Sedimentary Basin, with “significant natural gas growth potential,” according to the release.

Whitecap and Veren said the combined company becomes the largest producer in the high margin Kaybob Duvernay and Alberta Montney with approximately 220,000 boepd of unconventional production, as well as the largest landholder in the Alberta Montney and the second largest landholder across unconventional Montney and Duvernay fairways with 1.5 million acres in Alberta.

The combined company will also have over 4,800 total development locations in the Montney and Duvernay to drive decades of future production growth, they said.

Following the transaction’s closing, Whitecap shareholders will own approximately 48 percent and Veren shareholders will own approximately 52 percent of the total common shares outstanding of the combined company, according to the release.

The combination is immediately accretive to Whitecap standalone funds flow per share and free funds flow per share, before incorporating any benefit from expected synergies, the two companies said, adding that they expect annual synergies of over CAD 200 million independent of commodity prices.

Whitecap President and CEO Grant Fagerheim said, “We are excited to bring together two exceptionally strong asset bases to create one world-class energy producer with one of the deepest inventory growth sets of both liquids-rich Montney and Duvernay opportunities, along with conventional light oil opportunities in some of the most profitable plays in the Western Canadian basin. Our combined company will include exceptional technical and support personnel from the two companies in both the office and field and an experienced Board of Directors that prioritizes sustainable and profitable growth to generate strong returns for our combined shareholders. We look forward to bringing Whitecap and Veren together and providing increased value to both sets of shareholders well into the future”.

Veren President and CEO Craig Bryksa said, “This strategic combination unlocks significant value for all shareholders and together positions us as a stronger, more resilient company. With enhanced scale, deep inventory, and increased free funds flow generation, we’re building a business with a differentiated competitive advantage. Our combined balance sheet reinforces our financial strength and enhanced credit profile, ensuring the long-term success in an evolving market. Together we’re unlocking synergies, creating new opportunities, and setting the stage for sustainable growth”.

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