Painted Pony Petroleum Ltd. said March 15 it landed a Montney acquisition that the company expects will increase its position in the play by 52%.
For C$276.6 million (US$207.7 million), the Calgary, Alberta-based company will acquire all of the issued and outstanding shares of UGR Blair Creek Ltd., which operates high working interest Montney assets with established production, infrastructure and land holdings in northeast British Columbia.
In addition, Painted Pony entered an agreement with a syndicate of underwriters led by Cormark Securities Inc. and TD Securities Inc. to sell about 18 million shares on a bought-deal basis. Gross proceeds of $100.9 million will be used to fund drilling on the acquired and existing company lands.
The acquisition includes 69,143 net acres with current production of 8,500 barrels of oil equivalent per day jointly with and adjacent to Painted Pony's assets. Pro forma, the company's Montney land position will increase to 201,009 net acres at an average 94% working interest.
"As partners and neighbors, UGR's assets fit like a glove with our existing asset base," Pat Ward, president and CEO of Painted Pony, said in a statement.
Ward said Painted Pony's "significantly lower" drilling and completion costs relative to UGR will generate material synergies and accretion as the company executes its business plan on an expanded land base.
UGR is a privately-held 100% controlled subsidiary of Unconventional Resources Canada LP, a portfolio investment held in certain private equity funds advised by ARC Financial Corp. and EnCap Investments LP.
The transaction will result in ARC and EnCap becoming indirect investors in Painted Pony. The company expects the acquisition to close in May, subject to certain customary conditions and regulatory approvals. (C$1 = US$0.75)