Cardinal Energy closes acquisition of light oil assets in Canada for $300m
Cardinal Energy has completed its $300m light oil acquisition in Midale, Saskatchewan, and House Mountain, Alberta, Canada.
Announced last month, the acquisition is part of the company’s strategy to increase its exposure to light oil and enhance its overall operating netbacks.
Cardinal Energy has commenced a process to divest some of the royalty interests and fee title lands, which are part of the current acquisition, and expects to use the sales proceeds to reduce debt in the third and fourth quarters of this year.
Taking into consideration the acquired assets, as well as additional light oil drilling inventory in Mitsue (Gilwood) and Grande Prairie (Dunvegan), the company expects future organic light oil growth and higher operating netbacks going forward.
Through the acquisition, the company is set to add 5,000boe/d of low-decline light-oil operated production, with the current production following the acquisition estimated to be more than 21,500Boe/d.
The acquisition also includes up to 250 light oil drilling locations at Midale and more than 50 light oil drilling locations at House Mountain.
Apart from the closing of the deal, Cardinal increased its credit facilities to $325m.
The company intends to explore operating and capital opportunities to reduce per unit operating costs in the future.
It arranged funding for the acquisition through a bought deal public financing by a group of underwriters including RBC Capital Markets, CIBC Capital Markets, GMP FirstEnergy, National Bank Financial among others.