Canada’s Cenovus Energy has closed a $100 million deal to accelerate the development of its Marten Hills oil assets, the company informed.
The deal is a total sale of Marten Hills to Headwater Exploration Inc. with a $35 million payment in cash; $50 million in common shares of Headwater and $15 plus in share warrants.
“Each warrant will entitle the holder to acquire one Headwater common share for a period of three years following the completion of the transaction at an exercise price of $2 per share.”, the statement explains.
Cenovus will retain a gross overriding royalty on the lands. This will allow the company to benefit from the future development of the Clear Water formation on Marten Hills.
For Headwater, they will acquire a 100% working interest in approximately 2,800 barrels per day of medium oil production and 270 net sections of the Clearwater rights.
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Cenovus sale will be closed by December
Also, Headwater committed to spending at least another $100 million on Marten Hills by the end of 2022, in order to further develop the acquired assets.
“This is a unique opportunity for us to partner with a well-capitalized and highly respected management team. In order to accelerate development at Marten Hills,” said Alex Pourbaix, Cenovus President & Chief Executive Officer.
“These are high-quality assets that were unlikely to receive near-term funding from Cenovus. We believe this transaction will provide compelling value for Cenovus shareholders over the long term.”, he concluded.
Neil Roszell, Headwater’s CEO, also commented on the matter: “Our common goals of developing and maximizing the value associated with this enviable position in the prolific Clearwater play have aligned us on all key business principles.”
For Headwater, the transaction solidifies its strategy to become a top oil and gas producer, focused on asset quality. Also, established the company as the only public company with participation in the Clear Water area.
The transaction is expected to close on coming months, no later than December 22, 2020.
