Provident Energy, Midnight Oil To Merge, Creating Alberta-Focused Co. With 36MMBO Proved

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
460MM
Description

To form Alberta-based company with 36 MMBOE proved, 13,000 BOE/d.

Midnight Oil Exploration Ltd., Calgary, (Toronto: MOX) plans to merge with the upstream oil and gas division of Provident Energy Trust, Calgary, (Toronto: PVE) to form a yet-unnamed energy company in a deal valued at approximately C$460 million.

Under the terms of the agreement, the new company will pay Provident C$120 million from its expected credit facility of C$220 million. In addition, each Provident unitholder will receive 0.12225 shares of the new company per unit held, while Midnight shareholders will receive 0.1 shares per Midnight share held; Midnight plans to consolidate its shares on a 10:1 basis prior to the issuance of the new company's shares. Provident unitholders will own approximately 81% of the new company's shares.

The resulting company will have assets in the Peace River Arch, Deep Basin, Dixonville and Red Earth areas of Alberta. Proved reserves will be 36 million barrels of oil equivalent (37% oil), for an acquisition price of C$14.27 per proved barrel.

Production from the new company, which has more than 500 drilling locations, is approximately 13,000 barrels of oil equivalent per day.

The boards of both Midnight and Provident have unanimously approved the arrangement.

The company will be led by Midnight's current management team, including president and chief executive Fred Woods.

Woods says, "The synergies from the combination of the two entities creates a win/win transaction for both groups of equity holders. [The new company's] free cash flow and increased size will better enable us to efficiently and effectively develop our Deep Basin resource opportunities, which were a challenge at Midnight's existing size and given current natural gas prices. [Provident's] assets also provide access to an extensive network of gas plants and processing infrastructure."

National Bank Financial Inc. and Cormark Securities Inc. are financial advisors to Midnight. Paradigm Capital Inc. is strategic advisor to Midnight. TD Securities Inc. is financial advisor and Morgan Stanley & Co. Inc. is strategic advisor to Provident.