The Canadian Tourmaline Oil Corp. has announced the acquisition of Crew Energy for approximately 1.3 billion Canadian dollars (950 million US dollars) as part of expansion plans ahead of the expected increase in natural gas prices.
Like Tourmaline itself, Crew Energy operates in the Montney Formation and the Alberta Deep Basin. These, as the acquiring company announced in its press release, are the largest natural gas reserves in Canada.
“Generally, the right time (to do business) is at the bottom of cycles, and we believe we are near, at or above the bottom of the natural gas price cycle,” Tourmaline CEO Mike Rose said in an interview with the Calgary Herald.
“The future looks bright for Canadian and North American gas with the doubling of LNG capacity in the US and the commissioning of Canadian LNG on the West Coast,” Rose added.
Tourmaline Oil is already Canada’s largest natural gas producer, but wants to continue to grow and is sparing no expense – the deal price was 72 percent higher than Crew Energy’s last closing price before the deal was completed.
“This is one of the largest takeover premiums we have seen in the Canadian oil and gas sector in a long time,” Jeremy McCrea, an analyst at BMO Capital Markets, told the Calgary Herald.
“There are fewer and fewer opportunities for LNG operators to secure ‘cheap’ gas molecules, and with many of these LNG projects coming online over the next decade, natural gas production in British Columbia will need to increase significantly,” McCrea noted.
The Canadian government is not a big fan of liquefied natural gas. Earlier this year, Resources Minister Jeremy Wilkinson made this clear when he said Ottawa was not interested in investing in LNG projects or supporting them financially through subsidies.
Nevertheless, global demand for liquefied natural gas (LNG) is quite positive, and energy companies in Canada have decided to seize the opportunity despite the government’s sole focus on emissions.
By Irina Slav for Oilprice.com
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