Strathcona Resources Ltd. agreed on Sunday to buy Greenfire Resources Ltd. in a deal valued at about C$2.7 billion to C$2.9 billion including debt, combining two Alberta heavy oil and oil sands producers that share the same controlling investor.
Greenfire shareholders can choose 0.25 Strathcona share for each Greenfire share, worth C$9.09 at Nov. 6 prices and a 15% premium, or C$11 in cash, a 39% premium. Neither option will be prorated. Strathcona expects to issue roughly 43 million to 60 million shares and pay up to about C$740 million in cash, depending on elections, and plans to fund the cash from its reserves-based credit line. The value includes about C$550 million of Greenfire net debt. In U.S. dollars, the deal is worth about $1.9 billion to $2.1 billion.
One owner on both sides
Calgary-based Waterous Energy Fund owns 72% of Greenfire and 57% of Strathcona. It has agreed to vote for the deal and to take shares for its Greenfire stake, which would lift its ownership of the combined company to between 60% and 64%. Because the fund sits on both sides, each company formed a special committee of directors independent of it, obtained formal valuations and will need approval from a majority of minority holders in addition to a two-thirds vote. Shareholder meetings are expected in January 2027, with closing shortly after, subject to court, exchange and Competition Act approvals.
Reserves and taxes
The combined company would produce about 153,000 barrels a day and hold more than 3 billion barrels of proved and probable reserves, which Strathcona says equals a 54-year reserve life. Strathcona expects about C$75 million of annual savings within a year, mainly from cheaper borrowing, procurement and removing a duplicate public company. Greenfire’s roughly C$2.8 billion of tax pools would push Strathcona’s cash-tax horizon to 2031 from 2027, saving about C$400 million over four years. Strathcona says the larger company should earn an investment-grade rating in the Canadian bond market within a year of closing. Greenfire would be delisted from Toronto and New York.
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