Canada’s largest natural gas producer buys Rival to capitalize on higher prices

Tourmaline Oil Corp. from Canada has announced acquiring Crew Energy for approximately $1.3 billion, or $950 million, as part of expansion plans ahead of expected increases in natural gas prices.

Like Tourmaline itself, Crew Energy operates in the Montney Formation and Alberta Deep Basin, which, the buying company said in its release, are Canada’s largest natural gas reservoirs.

“Generally, the right time (for trades) is at the end of cycles and we think we’re near, or at, or past the bottom in the natural gas price cycle,” Tourmaline chief executive Mike Rose told the Calgary Herald. interview.

“The future looks bright for Canadian and North American gas with the doubling of LNG capacity in the US and the launch of Canadian LNG on the West Coast,” Rose added.

Tourmaline Oil is already Canada’s largest natural gas producer, but it’s poised to grow further and isn’t skimping on costs – the deal price represented a 72% premium to Crew Energy’s last closing price before the deal closed.

“This is one of the biggest takeaway premiums we’ve seen in Canadian oil and gas in a long time,” BMO Capital Markets analyst Jeremy McCrea told the Calgary Herald.

“There are fewer and fewer options for LNG operators to secure ‘cheap’ gas molecules, and as we begin to see many of these LNG projects come online over the next decade, natural gas production from BC will have to be significantly higher,” McCrea. noted.

The Canadian federal government is not a big fan of liquefied natural gas. Earlier this year, Resources Minister Jeremy Wilkinson made that clear, saying Ottawa was not interested in investing in any LNG projects or supporting them financially through subsidies.

However, global LNG demand trends have been quite bullish, and Canadian energy companies have decided to take advantage of this opportunity, despite the government’s exclusive focus on emissions.

By Irina Slav for Oilprice.com

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