(Bloomberg) -- Tourmaline Oil Corp. agreed to buy Bonavista Energy Corp. for about C$1.5 billion ($1.1 billion) in cash and stock to increase its presence in the Deep Basin gas play in western Canada.

Canada’s largest gas producer will acquire Bonavista for C$725 million in Tourmaline common shares and C$725 million in cash, less Bonavista’s net debt, the Calgary-based company said Monday. Tourmaline’s output will increase to the equivalent of 600,000 barrels of oil a day after the acquisition, which is expected to close late next month.

“The acquisition will be immediately accretive to cash flow, with the assets expected to generate annual operating income of about C$450 million over the next three years,” Chris MacCulloch, analyst at Desjardins Securities Inc., said in a note.

Tourmaline’s purchase of Bonavista continues a series of acquisitions in recent years that have boosted its output while it has also pushed into exports of liquefied natural gas off the US Gulf Coast to garner better prices for its production. Tourmaline bought Rising Star Resources Ltd. for C$194.3 million last year and purchased Black Swan Energy Ltd. for C$1.1 billion the prior year. 

“Given our scale, we see the opportunity to improve the returns from these assets,” Chief Executive Officer Michael Rose said of the Bonavista deal in an interview with BNN Bloomberg Television. “We can reduce costs, and we have a more diversified marketing portfolio, so we see an opportunity to do even better.”

Tourmaline said in May that it saw acquisition opportunities in the second half of the year amid weak gas prices. The company is boosting gas output, with plans to sign more LNG contracts and increase volumes dedicated for LNG exports to 200 million cubic feet a day or more.

Tourmaline shares rose 2.8% to C$71.39 at 1:42 p.m. Toronto time. 

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