Canadian oil and natural gas trust Daylight Resources Trust said late on Sunday it is to buy Highpine Oil & Gas Ltd for C$530 million ($492 million) including the assumption of debt and transaction costs.

Highpine shareholders will receive 0.85 of a Daylight trust unit, or C$7 in cash per share held, a premium of 38 percent to the 20-day weighted average of Highpine's share price.

Daylight said the combined company was expected to be able to produce an average of about 38,000 barrels of oil equivalent per day (boe/d) from the closing of the deal until year-end.

The deal will also increase Daylight's working interest undeveloped land holdings to about 600,000 acres, the company said.

The combined entity will have the capacity to accelerate Daylight's strategy of building an even more dominant position in its key growth areas of Elmworth and West Central Alberta, it said.

The deal, which Daylight said is highly accretive to per unit cash flow and production, was approved by the boards of both companies and is expected to close by the middle of October.

Calgary, Alberta-based Daylight said the deal provides increased capacity to fund a larger capital program and flexibility to hold cash distributions at current levels.

Daylight had previously announced monthly distributions of 8 Canadian cents per trust unit for the third quarter.

Units of Daylight Resources Trust, which was formed through merger between Daylight Energy Trust and Sequoia Oil & Gas Trust in Sept 2006, closed at C$8.13 Friday on the Toronto Stock Exchange, while Highpine's shares ended at C$5.65.

($1=1.078 Canadian dollar)

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Anshuman Daga/Will Waterman)