Tourmaline Oil to buy Santonia Energy for C$189.1 mln

CALGARY, Alberta, March 4 Tue Mar 4, 2014 11:33am EST

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CALGARY, Alberta, March 4 (Reuters) - Tourmaline Oil Corp , a Canadian oil and gas producer, said on Tuesday it will acquire Santonia Energy Inc for shares and debt worth C$189.1 million ($170.7 million) in a friendly deal that will give it production and exploration lands in the Deep Basin region of western Alberta.

Tourmaline is offering 0.03 of its own shares for each Santonia share, which it pegged at a value of C$1.50, a 12 percent premium to Santonia's Monday closing price on the Toronto Stock Exchange.

The company expects to issue 3.23 million new shares to pay for the acquisition and assume C$28.3 million of Santonia's debt.

The purchase adds about 3,800 barrels of oil equivalent per day of new production to Tourmaline, whose output averaged 86,089 boepd in the fourth quarter.

The acquisition also brings 221,000 acres of exploration land in liquids-rich Deep Basin region in west central Alberta, near Tourmaline's existing properties, and 24.2 million barrels of oil equivalent of proved and probable reserves.

"The acquisition ... is a smart strategic tuck-in deal for (Tourmaline)," Matthew Taylor, an analyst at National Bank Financial, wrote in a research note.

The deal, which has been approved by Santonia's board, is expected to close by the end of April.

Santonia shares were up 10 percent at C$1.48 late on Tuesday morning on the Toronto Stock Exchange, while Tourmaline stock was down 1.8 percent at C$49.38.

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