Petrobank Energy and Resources Ltd said it would buy TriStar Oil & Gas Ltd in a cash and stock deal worth about C$2.24 billion, to form PetroBakken Energy Ltd, a Bakken-focused light-oil producer.
Petrobank said it would capitalize PetroBakken with its Canadian Business Unit assets and $400 million in cash and then acquire all outstanding TriStar shares.
TriStar shareholders will receive C$14.75 cash, or 0.5350 of a PetroBakken share, or a combination thereof, being about C$3.75 a share in cash and 0.3989 of a PetroBakken share, for each share held, the companies said in a statement.
The deal represents a premium of 28 percent to TriStar's Tuesday close based on the consideration of C$14.75 received by TriStar shareholders.
The deal value of C$2.24 billion is based on the number of TriStar shares outstanding, according to Reuters data.
After close, Petrobank would own about 64 percent of PetroBakken's anticipated shares outstanding, while TriStar would own the rest.
Prior to closing, PetroBakken expects to finalize a $1.05 billion borrowing base credit facility currently being arranged by TD Securities Inc, the companies said.
The companies expect the transaction to close on or near Oct. 1.
Following completion, PetroBakken plans to divest a package of Alberta-based assets consisting of about 9,500 boepd (barrels of oil equivalent per day), and 40.1 mmboe (millions of barrels of oil equivalent) of proved plus probable reserves to enhance its focus on Southeast Saskatchewan light-oil resource plays.
PetroBakken will primarily be a pure-play, Southeast Saskatchewan, light oil-focused company with 2009 exit production of more than 37,000 boepd, the companies said.
Petrobank shares closed at C$33.73, while those of TriStar closed at C$11.51 Tuesday on the Toronto Stock Exchange.
(Reporting by Isheeta Sanghi in Bangalore; Editing by Ratul Ray Chaudhuri)