Aug 28 Bonavista Energy Corp, a
Canadian oil and gas company, has agreed to buy a natural
gas-weighted asset in Alberta for about C$155 million ($157.3
million) to boost production by nearly 10 percent.
Production at the property, which is within the company's
deep basin core area in west central Alberta, is about 6,700
barrels of oil equivalent per day (boe/d), most of which is
natural gas, Bonavista said.
Bonavista now expects production for the year to average
between 69,500 boe/d and 70,500 boe/d, up from the previous
range of 68,000 boe/d to 69,000 boe/d.
The company will fund the acquisition through a discounted
bought deal with a syndicate of underwriters co-led by TD
Securities Inc and CIBC World Markets Inc. The company will sell
18.2 million common shares to raise C$300.3 million.
"The deal for the acquired properties looks reasonable, but
we question the wisdom of the equity raise in conjunction with
the transaction as it gives the impression the firm is financing
its dividend by diluting its shareholders," Morningstar analyst
Robert Bellinski said.
The Calgary-based company pays a monthly cash dividend of 12
Canadian cents per common share.
Bonavista also increased its capital budget to C$410
million. Earlier this month, the company lowered the budget to
Canadian oil and gas explorer Peyto Exploration &
Development Corp said last month it will buy Open Range
Energy Corp in a deal valued at C$100 million as it
vies for a larger slice of the Alberta deep basin area.
"This is classic Bonavista style, making countercyclical gas
acquisitions," AltaCorp Capital analyst Jeremy McCrea said.
"This does consolidate a bit more of their (Bonavista's)
deep basin focus."
Bonavista shares closed at C$17.03 on Tuesday on the Toronto