Sept 12 (Reuters) - Canada's Tamarack Valley Energy Ltd
said on Monday it will buy oil producer Deltastream
Energy Corp for C$1.425 billion ($1.10 billion) in Alberta's
small but fast-growing Clearwater play.
The Clearwater produces 91,000 barrels of oil per day (bpd),
according to RBC, accounting for less than 2% of Canada's total
oil production based on Canada Energy Regulator data.
But output has doubled during the past year, providing a
fast-growing oil source for the world's fourth-largest oil
producer at a time when much-larger oil sands projects are
expanding only slowly. Well licensing is more active in the
Clearwater than anywhere else in Western Canada, RBC said.
"There is so much opportunity in this play," said Tamarack
CEO Brian Schmidt, in an interview. "There's going to be lots
more to do there."
Schmidt said the Clearwater has the best economics of any
North American play - measured by how often a well repays its
capital - due to the large volume of oil in place and the
relatively low cost of extracting it.
Tamarack plans to boost output of the acquired assets by 18%
to 23,000 barrels of oil equivalent per day next year.
North America benchmark oil trades around $88 per barrel, up
25% year over year on strong demand following global sanctions
on exporter Russia.
The purchase is by far the biggest Clearwater deal yet.
There have been 13 other Clearwater deals since the second
quarter of 2020 worth a combined C$940 million, said Tom Pavic,
president of Sayer Energy Advisors.
Tamarack's deal comprises C$825 million in cash, C$300
million in deferred acquisition payment and C$300 million in
equity at C$3.75 per share.
Topaz Energy Corp said separately it will buy a
newly created 5% gross overriding royalty on current and future
oil production from Deltastream's entire Clearwater acreage for
The Clearwater's total output could grow to 200,000 bpd in
two years, depending on availability of rigs and labor, said
Topaz CEO Marty Staples.
Private operators make up about half of the Clearwater's
volume. Publicly traded producers include Canadian Natural
Resources, Baytex Energy and Headwater
Shares of Tamarack edged up 0.3% in Toronto, after it also
announced a bought share deal, while Topaz stock climbed 6.3%.
Calgary, Alberta-based Tamarack expects the Deltastream deal
to close before the end of October, after which it plans to
raise annual dividend by 25% to 15 Canadian cents per share.
($1 = 1.2995 Canadian dollars)
(Reporting by Rod Nickel in Winnipeg; Arunima Kumar and Ruhi
Soni in Bengaluru; Editing by Vinay Dwivedi, Nick Zieminski and