Brian Zinchuk is editor and owner of Pipeline Online
Ridgeback Resources’ Bakken land, in yellow. Ridgeback Resources
CALGARY, ALBERTA – Saturn Oil & Gas Inc. announced the evening of Feb. 28 that it has successfully completed the previously announced acquisition of Ridgeback Resources Inc. in a half-billion dollar deal.
The deal was initially announced on Jan. 20.
Ridgeback was a privately held oil and gas producer focused on light oil production in Saskatchewan and Alberta. The transaction value of the deal came in at approximately $516 million1.
The Ridgeback acquisition adds:
- approximately 17,000 boepd of additional oil and natural gas production (approximately 140% increase); and
- target run rate production of over 30,000 boepd (82 per cent crude oil and NGL’s).
“With the closing of the Ridgeback acquisition, Saturn has diversified its light oil focused production base with a deep and sustainable portfolio of development opportunities,” said John Jeffrey, CEO of Saturn, said in a release. “We now have a total inventory of over 940 (gross) booked drilling locations to sustain Saturn’s production for over a decade.”
Saturn described the financing as such: “Consideration for the Ridgeback acquisition was comprised of $475 million in cash, and the issuance of 19,406,167 common shares in the capital of the company. The cash portion of the purchase price was funded through the net proceeds of Saturn’s previously announced $125 million bought deal equity financing, and proceeds from an amended and restated credit agreement with the company’s existing lender which increased the Company’s borrowing capacity and provided additional proceeds of $375 million. The financing was completed by way of a prospectus supplement to the company’s base shelf prospectus and was underwritten by Echelon Capital Markets, as sole bookrunner and co-lead, Canaccord Genuity Corp., as co-lead, and with syndicate underwriters including Eight Capital, Beacon Securities Limited and Paradigm Capital Inc. The company received strategic lead orders from GMT Capital Corp., Libra Advisors, LLC and other institutional investors, and will seek to appoint up to two new members to the board of directors to expand its technical and operational expertise.
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“In accordance with their terms, each subscription receipt of the company issued pursuant to the Financing was exchanged for one Common Share concurrently with the completion of the Ridgeback Acquisition, and the net proceeds of approximately $117 million were released from escrow to fund a portion of the purchase price of the Ridgeback Acquisition. Holders of subscription receipts are not required to take any action in order to receive the underlying Common Shares, and the subscription receipts are expected to be de-listed from trading on the TSX Venture Exchange as of the close of business on March 1, 2023.”
Ridgeback Acquisition Overview
The Ridgeback Acquisition bolsters Saturn’s existing Oxbow Asset light oil production in southeast Saskatchewan with synergistic assets that include approximately 5,000 boepd of high cash flow netback production, increasing Saturn’s production in the area by over 65 per cent. The Ridgeback acquisition more than doubles the light oil production of Saturn’s existing and adjoining core growth asset in Southeast Saskatchewan, the company said.
The deal provides diversification into two provinces, and two products – oil and gas.
With the completion of the Ridgeback Acquisition, approximately 40 per cent of Saturn’s production will be in Alberta, offering play diversification of highly economic, light oil focused drilling. Saturn said each of the Alberta areas have high working interests: Cardium (68 per cent), Deer Mountain (100 per cent) and Kaybob (100 per cent) and have extensive operated infrastructure in place to drive low operating costs and realize high cash netbacks. The acquisition offers a new core area for the company with an entry into the Alberta Cardium play, one of North America’s largest oil pools, with over 300 de-risked development drilling locations and approximately 8,700 boepd of light oil focused production. The assets acquired from Ridgeback benefit from responsibly deployed capital directed to abandonment and reclamation programs with limited inactive liabilities and a strong Liability Management Rating (LMR) of over 3x.
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