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Strathcona Sources has agreed to purchase non-public equity-backed Serafina Power for $2.3 billion, sources with direct data of the matter stated on Wednesday, the most important acquisition but by the Canadian non-public oil and fuel producer.

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Serafina produces 40,000 barrels of oil equal (boe) per day within the province of Saskatchewan. Strathcona is concentrated on the Montney basin in Alberta and British Columbia, Chilly Lake oil sands and the Lloydminster heavy oil area. Strathcona produces 110,000 to 115,000 boe per day, primarily liquids.

Strathcona and Serafina didn’t reply to requests for touch upon the deal, which the sources advised Reuters is scheduled to shut on Aug. 29.

Reuters reported in March that Pine Brook Companions and Camcor Companions have been contemplating promoting Serafina.

Calgary, Alberta-based Strathcona — owned by Waterous Power Fund — has been among the many high consumers of oil and fuel belongings in Canada because it fashioned in 2020, hoping to revenue from oil at close to or above $100 per barrel since Russia’s invasion of Ukraine.

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Serafina commanded a “robust value,” justified by the lengthy lifetime of its belongings and good match geographically for Strathcona, stated Tom Pavic, president of Sayer Power Advisors, which advises on offers for oil and fuel producers.

However Canada’s upstream business general represents a consumers’ market as small producers wrestle to entry capital to make acquisitions, Pavic added.

Moody’s Traders Service stated it affirmed Strathcona’s credit score scores and constructive outlook, citing a big manufacturing and reserve base. It stated Strathcona would fund the deal by means of borrowings on its revolving credit score facility.

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Oil and fuel firms are producing excessive money stream as costs of each commodities commerce at excessive ranges attributable to sanctions towards main producer Russia which have constrained provides. Many firms are specializing in share buybacks and dividend will increase as an alternative of spending on greater manufacturing, nonetheless.

U.S. crude oil futures settled at US$90.66 a barrel, down 4 per cent on Wednesday, however up about 21 per cent this 12 months.

Strathcona introduced its buy of Caltex Sources in March and stated it had additionally acquired Alberta’s Tucker thermal oil discipline belongings in January.

The corporate has beforehand stated its technique is to buy belongings with choices so as to add manufacturing organically.

The most recent deal within the sector follows Whitecap Sources Inc.’s $1.9 billion buy of Montney and Duvernay oil and fuel belongings from U.S. oil main Exxon Mobil Corp and Imperial Oil Ltd, which was introduced in June.

© Thomson Reuters 2022