Petro-Canada close to wrapping up C$719M Prima Energy deal

Gary Park

Petro-Canada’s self-described step out of its North American natural gas business is now a done deal, with the formalities of its C$719 million takeover of Denver-based Prima Energy all but completed. The Calgary-based company reported July 23 that 93 percent of Prima’s shares were tendered to its cash offer, made through indirect, wholly-owned subsidiary, Raven Acquisition.

Petro-Canada President and CEO Ron Brenneman said Prima is an “excellent fit with our long-term strategy to sustain and expand our core North American” gas operations.

He said Prima, with 55 million cubic feet equivalent of production per day, 1,600 drillable locations in the Powder River and Denver-Julesberg basins and 360,000 undeveloped acres, sets Petro-Canada up to “benefit from the growing unconventional gas segment.”

Prima’s production is more than 80 percent gas and 40 percent of that comes from coalbed methane, which accounts for the bulk of its 552 billion cubic feet equivalent of proved plus probable reserves.

In entering the realm of tight gas and coalbed methane in the U.S. Rockies region, Petro-Canada is following the lead of its Canadian rival EnCana, which has invested heavily in unconventional prospects, and even gone one step higher by paying about C$80,000 per flowing barrel for Prima compared with EnCana’s C$65,000 for its Tom Brown acquisition.