Painted Pony Petroleum Ltd. (TSX: PPY) has entered into an agreement to acquire all of the issued and outstanding shares of UGR Blair Creek Ltd. for $276.6 million, consisting of the issuance of 41 million common shares of Painted Pony at deemed price of $5.60 for of $229.6 million and the assumption of $47 million UGR’s net debt.
UGR Blair Creek is a privately held 100% controlled subsidiary of Unconventional Resources Canada, LP (URC), a portfolio of ARC Financial, EnCap Investments, L.P.
UGR operates high working interest Montney assets with established production, infrastructure and land holdings jointly with and adjacent to Painted Pony’s assets in northeast British Columbia.
Painted Pony has also entered into an agreement with a syndicate of underwriters led by Cormark Securities Inc. and TD Securities Inc. for a bought deal of 18,018,100 common shares at $5.60 per share for gross proceeds of approximately $100.9 million.
A portion of the proceeds will be used to fund drilling on the acquired assets and on existing Painted Pony lands. The balance of the proceeds will be used to reduce bank indebtedness and general corporate purposes.
Following completion of the acquisition and the offering, ARC Financial and Encap will collectively hold or exercise control over approximately 26% of the issued and outstanding Painted Pony shares. Each of ARC Financial and EnCap shall have the right to designate one person to serve on the board of directors of Painted Pony.
TD Securities Inc. and Cormark Securities Inc. acted as financial advisors to Painted Pony in respect of the acquisition.
photo credit: Painted Pony