Calgary-based Saturn Oil & Gas Inc. has struck a $525-million-deal to buy privately-held Ridgeback Resources Inc.
The proposed agreement includes a cash payment of $475 million and $50 million of Saturn common shares going to Ridgeback shareholders.
The company said the cash portion of the deal will be funded by a $375 million increase of Saturn’s existing senior secured term loan and a $125 million bought-deal offering.
Saturn’s Chief Executive Officer John Jeffrey said in a statement that the acquisition of light-oil focused producer Ridgeback will help the company “establish material scale” in Alberta and Saskatchewan and grow profits in the coming years.
The Ridgeback purchase covers 430,000 net acres of land in four operating regions of Saskatchewan and Alberta, including hundreds of development drilling areas the company said will help sustain production levels in the future. Saturn would also see its annual oil production more than double to 27,170 barrels of oil equivalent per day from 12,500 and also double its annualized adjusted funds flow to $398 million.
Saturn said several of the southeast Saskatchewan properties covered in the deal are adjacent to properties already owned by the company, making the purchase a “synergistic addition.”
The deal is expected to close in the first quarter of this year.
Separately, Saturn said it plans to appoint two new directors to its board in an effort to “expand its technical and operational expertise."
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