M&A Q3 2020 – Canada sees resurgence in upstream deals

Canadian upstream activity sprung to life in Q3 with a series of deals agreed involving ConocoPhillips, Canadian Natural Resources and Whitecap Resources, based on Evaluate Energy’s latest M&A report.

Overall spend in Canada exceeded $900 million and could have been even higher if Obsidian’s rejected approach to merge with Bonterra had been successful.

These values signal a sharp increase on previous quarters but lag historic averages and obviously pale in comparison to the Cenovus-Husky mega deal agreed recently to kick off Q4.

“In the first six months of 2020, the largest individual E&P deal to be agreed in Canada saw Spartan Delta Corp. acquire Bellatrix Exploration’s assets via a bankruptcy process for around US$77 million,” said Eoin Coyne, Senior Analyst at Evaluate Energy and report author.

“In total, the Canadian upstream space had recorded just over $350 million in new deals by the end of June.

Source: Evaluate Energy M&A

“Canada’s recovery in the third quarter was mirrored by the wider oil market and global economy in that substantial recoveries have taken place since full lockdowns were lifted. It must be noted, however, that even with the huge Cenovus-Husky deal being agreed in early Q4, activity levels remain relatively muted in the Canadian market as a whole, compared to levels of M&A activity seen in years past.”

The full Evaluate Energy report, released again in partnership with Deloitte.

Major Canadian deals agreed in Q3:

• ConocoPhillips acquires Montney acreage from Kelt Exploration: ConocoPhillips reaffirmed that Canadian oil and gas remains an ongoing part of its strategy with a US$390 million purchase of liquids-rich Montney acreage from Kelt. Kelt will look to pay off all debt with the cash generated.
• Canadian Natural Resources acquires Painted Pony Energy: CNRL acquired Painted Pony Energy Ltd. for US$344 million – a value that includes roughly US$261 million in Painted Pony debt that was present on its most recently released balance sheet. Painted Pony’s production is heavily gas weighted, bringing a greater level of diversification to CNRL’s portfolio.
• Whitecap Resources acquires NAL Resources from Manulife: Whitecap Resources acquired NAL Resources from Manulife Financial Corp. in an all-stock deal worth $110 million. All-stock deals and corporate takeovers more akin to friendly mergers were a key feature of Q3 deals globally.

Evaluate Energy’s latest M&A report includes analysis on all major deals agreed this quarter. It includes details of acquisitions agreed in the U.S. with very friendly merger terms, plus analysis on an interesting cash generating arrangement for Antero Resources in West Virginia and an overview of recent West African deals involving Total, Woodside and Cairn Energy.