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Canadian Natural Concludes Acquisition Deal With Painted Pony

Zacks Equity Research
·3 min read

Canadian Natural Resources Limited CNQ recently informed that it has completed its acquisition of all the issued and outstanding common shares of Painted Pony Energy Ltd.

Earlier this week, shareholders of Calgary-based natural gas producer Painted Pony approved its sale to the much bigger player Canadian Natural for 69 Canadian cents per share wherein more than 86% Painted Pony shareholders voted in favour of this takeover deal announced in August. Per the pact, Canadian Natural paid $111 million in cash and assumed Painted Pony’s total debt of approximately C$350 million.

Rationale Behind the Deal

Painted Pony’s assets are said to well complement the currently Zacks Rank #3 (Hold) Canadian Natural’s diversified portfolio. Moreover, the integration between the two companies is expected to make a significant impression on Canadian Natural’s natural gas assets and production base in its core operating areas as Painted Pony’s land and production are located in the same regions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The takeover deal comprises Painted Pony’s properties in Northeast British Columbia areas of Blair, Daiber, Kobes and Townsend. These areas jointly produce nearly 270 million cubic feet of natural gas and 4,600 barrels of natural gas liquids per day.

The ongoing plunge in oil and natural gas prices due to the coronavirus-induced reduced demand dragged down energy stocks to record lows, prompting bigwigs to increase their holdings by acquiring smaller rivals at a relatively lower price. Canadian Natural is not the only company to ink a takeover deal in the middle of the prevalent pandemic.

Last month, Chevron Corporation CVX also signed a contract to acquire Noble Energy NBL in an all-stock deal worth $5 billion. The buyout, which is one of the largest energy deal wins since the beginning of the COVID-19 outbreak, further includes Noble Energy's hefty debt load, which will be valued at approximately $13 billion.

Another major energy deal is said to have taken place between Devon Energy Corporation DVN and WPX Energy (WPX) wherein the two companies decided to merge in a bid to strengthen their position in the Permian Basin. Per the agreement, WPX Energy’s shareholders will get 0.5165 shares of Devon common stock for each share of WPX common stock owned. The enterprise value of the combined entity will be roughly $12 billion, reckoning the closing price of Devon and WPX Energy on Sep 25, 2020.

About Canadian Natural

Established in 1973, Calgary-based Canadian Natural is one of the largest independent energy companies in Canada, engaged in the exploration, development and production of oil and natural gas. The company boasts a diversified portfolio of crude oil (heavy as well as light), natural gas, bitumen and synthetic crude oil (SCO).

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Noble Energy Inc. (NBL) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
 
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Zacks Investment Research