Long Run Exploration has entered an agreement to buy fellow Canadian company Crocotta Energy.
Long Run revealed on Thursday it had agreed to buy all of the issued and outstanding shares in Crocotta in a deal worth about C$357 million ($329 million), including debt.
Under the deal Crocotta shareholders will receive a combination of common shares of Long Run as well as common shares and warrants of a newly established Montney-focused exploration company, ExploreCo, which will be led by Crocotta’s current management team.
The deal will see Crocotta shareholders receive 0.415 of a Long Run share, one common share of ExploreCo and 0.2 arrangement warrants of ExploreCo for each Crocotta share they hold.
Long Run said each arrangement warrant would entitle the holder to purchase one ExploreCo common share at a price of C$1.70 for a period of 30 days following closing of the deal.
The newly formed ExploreCo will inherit Crocotta's assets in north-east British Columbia and north-west Alberta which will be excluded from Long Run’s acquisition of Crocotta.
Long Run will however acquire Crocotta’s Edson Cardium and Bluesky assets and assume about C$115 million of net debt.
It said the acquisition of Crocotta would add roughly 7500 barrels of oil equivalent per day of production to its books, along with related production infrastructure and about 150,000 net acres of undeveloped land.
The undeveloped land contains more than 100 low risk Cardium and Bluesky development drilling opportunities located within in Long Run’s recently established Edson Pine Creek core area in Alberta.
Long Run also believes the acreage contains exploration upside in the Wilrich, Notikewin, Viking, Second White Specks, and Belly River formations.
The boards of both companies have approved the deal and expect to complete the arrangement in August.