Tourmaline Cements Top Position in Canada’s Deep Basin With $1.45 Billion Bonavista Deal

The acquisition is expected to help Tourmaline, already the largest Deep Basin producer, exit 2023 with production of more than 600,000 barrels of oil equivalent per day.

“While we expect the Bonavista assets to be largely maintenance-focused initially, at first glance the deal appears to be attractively priced in context of meaningful free cash generation plus features the benefits of significant embedded tax pools,” RBC Capital Markets analyst Michael Harvey said.

Tourmaline’s shares rose 1.9% in Toronto.

The offer consists of C$725 million in Tourmaline common shares and C$725 million in cash.

The deal, which is expected to close in the second half of November, will immediately add to Tourmaline’s 2024 free cash flow and generate net operating income of about C$450 million per year in 2024 through 2026, the company said.

Bonavista, a major oil and gas producer, delisted from the Toronto Stock Exchange in 2020 as part of a recapitalization plan.

In September, Canadian natural gas firm Peyto Exploration & Development  agreed to buy Spanish energy company Repsol’s  Deep Basin assets for $468 million.

Tourmaline said it would raise its quarterly dividend by 7.7%. It also announced a special dividend of C$1 per share for the fourth quarter.

($1 = 1.3626 Canadian dollars)