Active M&A for Canada
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Montney gas basin in northern BC, Alberta, powering mergers & acquisitions
Gary Park for Petroleum News
Growing interest in the prolific Montney natural gas basin of northern British Columbia and Alberta is expected to power a lively year of mergers and acquisitions.
However, Tom Pavic, president of Calgary-based Sayer Energy Advisors, which tracked C$16.2 billion of M&A deal-making among oil and gas companies last year, cautioned that the stability that has entered the oil market over the past year could curb buying and selling this year.
"You will certainly see some deals being done," he told the Calgary Herald. "But there is definitely less product currently available for sale right now," he said.
The biggest deals negotiated last year included ConocoPhillips securing half of the Surmont oil sands project from France's Total Energies for C$4.4 billion, while Crescent Point Energy purchased assets in the Montney for C$1.7 billion and concluded the year with a C$2.6 billion acquisition of Hammerhead Energy.
Other major deals included Suncor Energy paying C$1.5 billion for Total Energies' stake in the Fort Hill's oil sands project and Tourmaline Oil paying C$1.45 billion for Bonavista Energy.
Energy profitability "We're in a phase of energy profitability that we haven't seen in more than 50 years," said David Szybunka, senior portfolio manager at Canoe Financial.
He expects the industry to be driven into M&A markets by balance sheets that are the cleanest seen in many years.
In a report issued this month by Wood Mackenzie, the energy consulting firm forecast that another banner year for M&As will focus on scale, performance and, as the industry matures, "diversification."
One of the firm's research analysts, Tyson Gervais, said small and medium-sized publicly traded producers that are active in the Montney could be on the lookout for deals, either as buyers or sellers.
"Canada is due for a real blockbuster deal with one like we haven't seen for a couple of years," he said.
Parallax Energy A taste of what might be in store occurred in November when newly formed exploration and production firm Parallax Energy closed an equity commitment involving Houston-based Carnelian Energy Capital.
Carnelian CEO Dustin Hoffman and chief financial officer Dan van Kessel said Parallax will have a broad acquisition strategy in Western Canada looking for properties and well completion technologies where they can use new drilling and completion methods to optimize the assets.
"We have got a lot of support to look at acquisitions anywhere from C$25 million up to C$500 million," Van Kessel said.
He said that across the Canadian sector some larger producers who recently completed transactions backed by debt will be looking to divest non-core assets while smaller public companies will be open for business with older privately held firms that are looking to sell.
"We're in a bit of a sweet spot right now," von Kessel said. "There's a lot of space for folks to make deals happen."
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