(Reuters) - Oil and gas producer Vermilion Energy Inc (VET.TO) (VET.N) said on Monday it would buy rival Spartan Energy Corp SPE.TO for C$1.40 billion ($1.11 billion), which will raise its light oil production in Canada and the U.S.
Canadian light oil, which is easier to extract and refine, is cheaper to produce than northern Alberta’s oil sands crude, but is not as fast-growing as the booming Permian shale play.
Spartan Energy, which has about 480,000 acres of light oil producing assets in the Canadian provinces of Saskatchewan, Alberta and Manitoba, is expected to have 23,000 barrels of oil equivalent per day boed this year.
Calgary, Alberta-based Vermilion had forecast 2018 output of 75,000 - 77,500 boed.
Vermilion Energy’s shares were trading down nearly 3 percent, while Spartan Energy’s shares were flat.
Vermilion said the deal will add to its production, fund flows from operations and reserves.
Vermilion also has operations in Europe and Australia. It entered southeast Saskatchewan, where most of Spartan’s assets are located, when it bought Elkhorn Resources in 2014.
Earlier this year, Vermilion said it would buy a privately held producer in the same region for C$90.8 million.
As part of the Spartan deal, Vermilion will offer C$1.23 billion of its own shares and take on C$175 million of Spartan’s debt.
Spartan shareholders will get 0.1476 of a Vermilion share for each share they own, Vermilion said in a statement.
Reporting by John Benny in Bengaluru; Editing by Anil D'Silva and Supriya Kurane