Tourmaline Oil to Buy Crew Energy in $947 Million Deal

(Bloomberg) -- Tourmaline Oil Corp. agreed to buy Crew Energy Inc. for C$1.3 billion ($947 million) as Canada’s biggest gas driller pushes to grow production in anticipation of rising gas demand for power and exports.

The all-stock transaction is valued at approximately C$6.69 a share, representing a 72% premium over Crew’s closing price on Friday, according to a statement from Crew on Monday. Crew shareholders will receive 0.114802 of a Tourmaline share in exchange for each share held. The deal includes the assumption of C$240 million in net debt. 

Crew’s shares surged as much as 74% to C$6.80 after the deal was announced, to the highest since December 2022. Tourmaline’s stock advanced as much as 3.2%.

The purchase adds the equivalent of about 29,000 barrels of oil a day of mostly gas production to Tourmaline’s output of about 562,000 barrels of oil equivalent a day, data compiled by Bloomberg show. It also adds more than C$200 million to Tourmaline’s anticipated 2025 free cash flow, the company said in a separate statement.

The deal further cements Tourmaline in the ranks of Canada’s largest energy companies, with the fourth-largest total production of oil and gas behind oil sands producers Canadian Natural Resources Ltd., Cenovus Energy Inc. and Suncor Energy Inc. And it continues a series of acquisitions in recent years by the gas driller after Tourmaline agreed to buy Bonavista Energy Corp. for about C$1.5 billion last October.

The addition of Crew will help Tourmaline expand its position in the Montney shale gas formation of Western Alberta and Eastern British Columbia. The company is pushing to increase production to 750,000 boe a day over the next five years amid forecasts for rising gas-powered electricity demand and growing liquefied natural gas exports from North America, including from projects currently under construction off Canada’s West Coast. 

The deal is expected to close in early October, subject to closing conditions.

Tourmaline said its 2024 average production guidance will be revised to 582,500 to 592,500 boe a day, from 575,000 to 585,000 boe a day, assuming the deal is completed by the expected time.

The company’s board also approved an increase in Tourmaline’s quarterly dividend, to 35 Canadian cents a share from 33 Canadian cents, the company said.

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