Canadian Natural Resources addresses oil weighting with Painted Pony purchase

Canadian Natural Resources Ltd. (CNRL) agreed to acquire Montney-focused Painted Pony Energy Ltd. this week in an all-cash deal worth C$0.69 per share, representing a total value (including debt assumed) of around US$344 million.

This acquisition of Painted Pony will help to re-balance the oil/gas split in CNRL’s portfolio as well as adding almost 200 producing wells, says Evaluate Energy Senior M&A Analyst, Eoin Coyne.

“In 2002, the oil/gas split on a production basis for CNRL was 52% in oil’s favour,” Coyne said. “This increased to reach 79% by Q2 of this year, following a series of large oil-weighted acquisitions. At a time when global events have highlighted the exposure of oil markets to demand shocks, the acquisition of Painted Pony will reduce CNRL’s oil weighting to 76% based on recent quarterly data from each company.”

Coyne also noted that the Painted Pony deal sees CNRL re-enter M&A after a relative hiatus during the first half of 2020. The table below shows the number of net producing wells acquired during the first half of each of the past five years, using analysis of monthly provincial well ownership data available via CanOils Assets. The acquisition of Painted Pony will add 197 producing wells (as per year end 2019 data disclosed by Painted Pony).

Source: Evaluate Energy M&A, via CanOils Assets

This is the second deal in the Montney for over US$100 million this quarter after an extremely quiet start to 2020 in the first six months of the year that only saw $340 million in new deals agreed for Canadian upstream assets. The first deal was an oil-weighted deal that saw ConocoPhillips acquire ~14,000 boe/d from Kelt Exploration for US$375 million in cash and the assumption of $30 million in financing obligations.

Evaluate Energy’s M&A database holds the details on these two deals as well as every upstream M&A deal around the world. Our data also includes deals from other energy sector industries, including renewable power deals. Click here for more information on Evaluate Energy’s global energy M&A database.