The Bold and the Bountiful
The year in deals in Alberta
When it comes to foreign takeovers of Canadian energy companies, will the last 12 months mark the end of the beginning or the beginning of the end? It’s not clear yet, but judging by the chill that’s fallen over the pace of deal-making activity in the patch, it may well be the latter. After all, while the $15.1-billion deal that saw Nexen gobbled up by CNOOC and the $6-billion takeover of Progress Energy by Petronas were major deals by any standard, the cryptic federal policy on foreign takeovers that emerged as a result may put a damper on future mega-deals.
Still, the flow of deal-making hasn’t completely dried up. With that in mind, here are some of the (other) noteworthy deals of the year in Alberta.
Three juniors – AvenEx Energy, Pace Oil & Gas and Charger Energy – announced their intention to merge and form a junior dividend-paying company called Spyglass Resources. But a sizable portion of Pace’s shareholders didn’t like the terms of the deal, and a proxy contest followed that included two delayed votes and much back-and-forth chatter. In the end, the deal passed muster and met the required two-thirds majority – barely.
Two years ago, the Brick looked like it was in deep trouble. But the Edmonton company, founded in 1971, appeared to be in the midst of a remarkable turnaround. That’s why its announcement that it was being sold to Leon’s this past March came as a surprise to some. But to industry insiders, it made perfect sense. With Walmart expanding its Canadian operations and Target on its way across the border, the two incumbents realized they were better off joining forces than trying to fight off the two mega-corporations alone. Indeed, it may have been their only option. The Brick and Leon’s will operate under separate banners and focus on their respective areas of strength – in the Brick’s case, Western Canada.
On November 21, management of Spartan Oil recommended that its shareholders accept an all-stock offer that was made by fellow junior oil producer Pinecrest Energy worth a deemed value of $5.12 per share. But they quickly changed their mind when Pinecrest shares slumped after the news of its offer came out. Bonterra Energy entered the fray, offering a more stable partner and a proposed dividend increase that, all told, made its offer (even once the $12.5- million break fee was factored in) worth 20 per cent more. The Bonterra-Spartan tie-up was made official in January.
Best of the Rest
Serial acquirer Crescent Point Energy (#36) did what it’s done so many times before, issuing stock in order to make another strategic acquisition. This time it paid US$784 million to buy Ute Energy, a company with production of 7,800 boe/d in the Uinta Basin in northeast Utah.
Pacific Rubiales took out C&C Energia in an all-stock deal valued at an estimated $500 million.
Ottawa announced that ExxonMobil’s $3.1-billion takeover of Celtic Energy (#164) had passed muster. Subsequent to that deal, Imperial Oil, which is approximately 70 per cent owned by ExxonMobil, stated that it would exercise its option to invest $1.55 billion for a 50 per cent stake in Celtic.