Peyto Exploration & Development Corp. has closed its acquisition of Repsol Canada Energy Partnership, which holds the Canadian upstream oil and gas business of Repsol Exploración, S.A.U., including all related midstream facilities and infrastructure located predominantly in the Deep Basin area of Alberta, for cash consideration of $468 million (CAD 636 million) before closing adjustments.
The acquisition increases Peyto’s production to 123,000 barrels of oil equivalent per day (boepd), which is 86 percent natural gas and 14 percent natural gas liquids (NGLs), the company said in a news release Tuesday.
The acquisition also adds over 800 high-impact gross drilling locations and includes extensive gas processing and pipeline infrastructure that complement Peyto’s legacy assets in the Edson area, the company said, adding that it has plans to begin drilling operations on the Repsol lands immediately.
According to the previous news release announcing the acquisition, it includes five operated natural gas plants with a combined net natural gas processing capacity of roughly 400 million cubic feet per day, around 1,367 miles (2,200 kilometers) of operated pipelines, and a 12-megawatt cogeneration power plant. The assets also include the Edson Gas Plant and the Central Foothills Gas Gathering System with its 217.5-mile (350-kilometer), large-diameter pipeline infrastructure that extends to both directions from the plant.
Peyto said it funded the acquisition partially by a previously closed bought deal financing where it issued 16,916,500 subscription receipts at $11.90 per receipt for gross proceeds of approximately $201 million, which included the full exercise of the overallotment option granted to the underwriters.
The net proceeds from the sale of the subscription receipts were released from escrow to Peyto upon the closing of the acquisition to partially fund the purchase price. The remainder of the purchase price was funded by drawing on Peyto’s credit facilities, according to the release.
In addition, upon closing of the acquisition, each subscription receipt was exchanged for one common share of Peyto. Following the exchange, former holders of the subscription receipts will be entitled to receive the dividend to be paid to holders of record of common shares on October 31, with payment occurring on November 15, provided they have not transferred the common shares before the date, the release said.
Peyto said it has also amended and restated its credit facilities with a syndicate of banks, increasing the committed revolving facility from $800 million to $1 billion and adding a new $174 million two-year amortizing term loan.
Meanwhile, Peyto has appointed Nicki Stevens to its board of directors. Stevens is the senior vice president of production, marketing, and ESG for Hammerhead Energy Inc. and has over 30 years of industry experience with a strong technical background in a variety of development and operational functions. She holds a Bachelor of Science in Mechanical Engineering from the University of Alberta and serves on the Board of Governors for the Explorers and Producers Association of Canada.
Further, Peyto has priced an issuance of $160 million of senior secured notes. The notes will have a coupon rate of 6.46 percent and mature in October 2030. “The notes will be issued by way of a private placement pursuant to a note purchase agreement and rank equally with Peyto’s obligations under its credit facility and existing note purchase and private shelf agreement”, Peyto said in the release, adding that interest on the notes will be paid semi-annually in arrears.
Proceeds from the notes will be used to repay the $100 million, 3.70 percent notes due Oct. 24, 2023, and to decrease Peyto’s borrowings under its amended credit facility. The closing of the private placement is expected to occur on October 24, according to the release.
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