Strathcona positioned the all-share deal as a way to give Pipestone shareholders a meaningful ownership stake in a large, low-decline rate, oil-weighted producer. Pipestone shareholders will hold about 9.05 per cent of the pro forma equity in the amalgamated company on a fully-diluted basis.
"We've been asked by a lot of folks, 'Why go public?'" said
"When you're private, it's a much simpler life. There's less reporting requirements … but I would also say that our view of actually being public is that the sector, in general, is undervalued."
Waterous said that as the sector consolidates, some acquisition targets have signalled they are interested in partnering with Strathcona but want to take shares in a publicly traded company — "hence our desire to become publicly traded."
"We're not going public because we think, 'Wow, look how great prices are. In fact, quite the opposite," he said.
"We think that the sector, generally speaking, presents multiple attractive acquisition opportunities for Strathcona."
Pipestone COO and interim CEO
"This business combination creates a new publicly traded, large-scale, long-life, oil-focused company with a strategic direction centred on combining production growth with a significant free cash flow generation," Hoffman said on the conference call.
"This transaction represents the culmination of an ongoing effort by the Pipestone management and board to uncover the optimal strategic and financial direction for our shareholders."
The combined company will focus on three core areas:
"Exposure to the pro-forma business could offer long-term diversity and option value across the basin, with that value to be better distilled upon close and visibility through guidance," he said.
Pipestone's board has already approved the arrangement, but shareholders still need to give their OK for the deal. They are to vote on it at a special meeting in late September, with the deal expected to close in early October.
The acquisition is also subject to other conditions, including the receipt of all required regulatory approvals and the approvals of both the TSX and the
This report by The Canadian Press was first published
Companies in this story: (TSX:PIPE)
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