Three small Canadian oil companies agree to merge
CALGARY, Alberta Dec 20 (Reuters) - A trio of small oil and gas companies said on Thursday they have agreed to combine to form a mid-sized Canadian producer, focusing on light crude in Alberta and paying dividends.
Pace Oil and Gas Ltd, AvenEx Energy Corp and Charger Energy Corp said they would offer new shares in a combined operation known as Spyglass Resources Corp that will produce about 18,000 barrels of oil equivalent a day.
It will be led by former Provident Energy executives, Tom Buchanan as chief executive and Dan O'Byrne as president, the companies said.
Combined properties are in such Alberta geological zones as Halkirk-Provost Viking, Randell Slave Point and Gilwood and the Pembina Cardium.
Under the deal, 1.3 Spyglass shares would be exchanged for each Pace share, one Spyglass share for each AvenEx share, and 0.18 Spyglass shares for each Charger share.
The transaction values Pace shares at C$4.32 each, AvenEx shares at C$3.32 each, and Charger shares at 60 Canadian cents each, the firms said.
"The combined asset base features mature, low decline properties and a balanced commodity profile coupled with the light oil development opportunities needed to sustain the model," Buchanan said in a statement.
The companies said recent deep discounts on Canadian heavy crude show the value of assets producing light oil, which has been much closer to U.S. benchmark prices.
Capital spending for 2013 is budgeted at C$80 million to C$90 million (US$81 million to C$91 million).
The companies said they would hold meetings for their shareholders in February to vote on the transaction. Two-thirds of each company's shareholders must approve the deal for it to proceed, they said.
The deal is expected to close in February.
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