September 15th (Hfrance.fr) - A large number of privately funded oil and gas companies have been put up for sale in the Canadian energy patch, as rising crude prices prompt buyout stores to step out and release some of their capital that was stuck for much longer than expected.
Sales present exciting opportunities for small and mid-cap Canadian oil companies to strengthen their operations, improve their chances of 'access debt and capital markets and reduce costs through economies of scale.
An industry source, currently at the search for buyout targets, said at mA dozen privately-backed Canadian oil and gas assets ranging from C $ 50 million (C $ 39.5 million) to C $ 500 million are for sale.
These include Corex Resources, backed by Azimuth Capital, Manitoba's second-largest oil producer, which could be valued at around C $ 300 million, sources told Hfrance .Fr. Another company in Azimut 's portfolio, TimberRock, and Fire Sky Energy, backed by PFM Capital, are also seeking buyers, according to sales documents viewed by Hfrance.fr.
Rise in junior companies to sell highlights how rising oil prices have created the best environment in more than seven years for private equity firms to cash in on Canadian energy investments .
Aps through a number of difficult years, smaller companies have cut costs and strengthened their balance sheets, making them more attractive acquisition targets, said Scott Barron, head of investment banking in Calgary at TD Securities.
"Everyone wants to see more size, more scale, more security. This is one reasons we are seeing more consolidation, "said Barron.
The buyout firms sold about $ 2.6 billion worth of Canadian oil and gas producers so far this year, the highest level since at least 2,010, agree to IHS Markit. The exits follow a wave of consolidation among Canadian companies after many global oil majors withdrew from the Canadian energy sector in the past five years.
The betweenPublic outlets were the buyers in all but one of the ten biggest energy contracts this year, involving a Canadian private seller, a review of data from Refinitiv showed. The best deals included tourmaline oil (TOU.TO) Takeover of Black Swan Energy Ltd for C $ 1.1 billion in June and purchase of Velvet Energy by Spartan Delta Corp for C $ 743 million in July. learn more
The oil capitalA Canadian era, Calgary was once a breeding ground for junior oil and gas companies. Experienced management teams would lease the rights to drill in a promising area and secure financial backing from private equity firms, which generally expected new junior companies to prove their reserves and go public within five years. , making a healthy profit.
But the global oil price crash of 2014-15 brought Canada's energy sector out of favor with international investors and a prolonged downturn has forced many private equity firms to hold onto their investments.
"Due to low oil prices, they don 't had no monetization options or exit routes over the past few years, "said Christopher Sheehan, director of fusio research.ns and acquisitions at IHS Markit.
Vaccine deployments to fight the pandemic and supply restrictions by the main oil-producing countries of the world have pushed U.S. crude to its highest level since 2014, giving buyout firms a long-awaited exit window and making banks more willing to lend.
" Oil at $ 70 (a barrel) means banks are now breathing much easier, not so quickly to put pressure on some companies - access to capital is much stronger than it is 'has been for years "said David Phung, CFO of Greenfire Acquisition Corp.
Greenfire in July bought (1662. T) Canadian JACOS unit, taking over the sands projectHangingstone bituminous in northern Alberta. learn more
"I don't think we are yet at the point where there is a flood but still $ 20 a barrel (up) and we could be there very quickly "said Phung.
($ 1 = C $ 1.2668) Report by Shariq Khan in Bangalore and Nia Williams in Calgary Edited by Denny Thomas and Matthew Lewis
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