Canadian Natural Resources Limited Announces the Acquisition of Substantially All of the Assets of Devon Canada Corporation
May 29 2019 - 5:00AM
Canadian Natural Resources Limited (“Canadian Natural” or the
“Company”) announces it has entered into an agreement, subject to
regulatory approval, to acquire substantially all of the assets of
Devon Canada Corporation (“Devon”), for a cash purchase price of
C$3.775 billion (subject to closing adjustments), with an effective
date of January 1, 2019 and a targeted closing date of June 27,
2019.
Devon’s high quality land and production are
located in Western Canada and are within Canadian Natural’s core
areas. The asset base consists of 100% operated long life low
decline thermal in situ production as well as 95% operated
conventional primary heavy crude oil production, both adjacent to
existing Canadian Natural assets.
The current production and reserves, before
royalties, from the working interests to be acquired by Canadian
Natural are as follows:
Crude Oil Before Royalties |
Production Capability |
Total Proved Reserves (MMbbl of crude oil)(1) |
Total Proved plus Probable Reserves (MMbbl of crude oil)(1) |
Thermal in situ |
108,200 bbl/d |
701 |
801 |
Conventional |
20,100 bbl/d |
29 |
78 |
Total |
128,300 bbl/d |
730 |
879 |
(1) Canadian
Natural internal estimates. |
Additionally, the assets acquired include 1.5 million acres of
land, of which 1.0 million acres are undeveloped, providing
significant upside value and opportunities.
Commenting on the acquisition, Canadian
Natural’s President Tim McKay stated “These high quality assets
complement our existing asset base and provide further balance to
our production profile, while not increasing the need for
incremental market access out of western Canada, as it is already
existing production. The assets provide us the opportunity to add
value through synergies, including facility consolidation and
operating and marketing efficiency opportunities, with targeted
benefits of C$135 million on an annualized basis. Through economies
of scale, as well as complementary research and development
efforts, we target to leverage technology advancements across the
combined portfolio to drive continuous improvement, cost reductions
and production optimization.”
Canadian Natural’s Executive Vice-Chairman Steve
Laut continued “This acquisition is a great fit for Canadian
Natural resulting in a win for both parties and provides further
balance to our diverse portfolio. Canadian Natural will now have
thermal in situ productive capacity of approximately 320,000 bbl/d,
with targeted 2019 exit production of approximately 250,000 bbl/d.
This productive capacity provides Canadian Natural with significant
opportunities to grow production volumes at very attractive
economics, through leveraging the significant existing
infrastructure at each of Jackfish, Kirby South, Kirby North and
Primrose.
At exit 2019, our targeted production balance
will improve to 250,000 bbl/d of thermal in situ production,
450,000 bbl/d of oil sands mining and upgrading production, 150,000
bbl/d of conventional light crude oil and NGLs production, 120,000
bbl/d of heavy crude oil production and 220,000 BOE/d of natural
gas production. The ongoing opportunity to leverage technology,
innovation and drive synergies is further enhanced through the
economies of scale gained. We welcome to Canadian Natural
approximately 735 new employees from Devon, comprised of both field
and head office personnel, and look forward to capturing their
ideas and energy, and creating successes as we have done in the
past with Devon employees who have joined us.”
As part of the transaction, the Company has
negotiated a new C$3.25 billion committed term facility, which is
available upon closing and is estimated to fully fund the net
purchase price, after operations closing adjustments from the
effective date. The committed acquisition facility was provided by
TD Securities as sole underwriter and bookrunner and TD Securities
acted as Financial Advisor to the Company on the transaction.
Based on current strip pricing, the Company will
continue to generate significant free cash flow (defined as
adjusted funds flow less budgeted capital and dividends) in 2019
and beyond and purchase shares under its normal course issuer bid
throughout 2019 in accordance with its defined free cash flow
allocation policy. Balance sheet metrics, based upon current strip
pricing, are targeted to exit 2019 with debt to book capitalization
of approximately 37% and debt to adjusted EBITDA at approximately
1.6x.
The transaction is subject to normal closing
conditions and regulatory approvals.
Canadian Natural is a senior oil and natural gas
production company, with continuing operations in its core areas
located in Western Canada, the U.K. portion of the North Sea and
Offshore Africa.
CONFERENCE CALL
A conference call will be held at 6:30 a.m.
Mountain Time, 8:30 a.m. Eastern Time on Wednesday, May 29,
2019.
The North American conference call number is
1-866-521-4909 and the outside North American conference call
number is 001-647-427-2311. Please call in 10 minutes prior to the
call starting time.
An archive of the broadcast will be available
until 6:00 p.m. Mountain Time, Wednesday, June 12, 2019. To access
the rebroadcast in North America, dial 1-800-585-8367. Those
outside of North America, dial 001-416-621-4642. The conference
archive ID number is 1378594.
WEBCAST
The conference call will also be webcast live
with user defined slides and can be accessed on the home page of
our website at www.cnrl.com. Presentation slides will be available
on Canadian Natural’s website in PDF format shortly before the live
conference call webcast.
Certain information regarding the Company
contained herein may constitute forward-looking statements under
applicable securities laws. Such statements are subject to
known or unknown risks and uncertainties that may cause actual
results to differ materially from those anticipated or implied in
the forward-looking statements. Refer to our website for complete
forward-looking statements www.cnrl.com
CANADIAN NATURAL RESOURCES LIMITED
2100, 855 - 2nd Street S.W. Calgary, Alberta, T2P4J8
Phone: 403-514-7777 Email: ir@cnrl.com
www.cnrl.com
STEVE W. LAUT
Executive Vice-Chairman
TIM S. MCKAY
President
MARK A. STAINTHORPE
Chief Financial Officer and Senior Vice-President, Finance
Trading Symbol - CNQ
Toronto Stock Exchange
New York Stock Exchange
Canadian Natural Resources (NYSE:CNQ)
Historical Stock Chart
From Jul 2024 to Aug 2024
Canadian Natural Resources (NYSE:CNQ)
Historical Stock Chart
From Aug 2023 to Aug 2024