Imperial Oil To Sell Certain Western Canada Assets To Whitecap For C$855 Mln

(RTTNews) - Canada-based Imperial Oil Ltd. (IMO, IMO.TO) said Monday that it has agreed to sell certain conventional oil and gas assets in Western Canada to Whitecap Resources Inc. (WCP.TO) for about C$855 million or $772.9 million.

The assets are located in Boundary Lake, Cynthia/West Pembina, and Rocky Mountain House in Western Canada. The assets involved in the transaction produced about 15,000 oil-equivalent barrels per day in 2013 on a net before royalty basis. The production was split evenly between oil and gas.

In a separate statement, Whitecap Resources said it has agreed to buy certain strategic light oil assets focused primarily in the company's Pembina Cardium/West Central core area, as well as at Boundary Lake in northeast BC that is located just northwest of the company's core Valhalla area.

According to Whitecap, the total net consideration is C$692.7 million, after giving effect to the disposition of certain Nisku natural gas production and related facilities located in the Pembina area to Keyera Corp. and deducting estimated purchase price adjustments of C$49.4 million.

Whitecap noted that the acquisition will enhance its sustainable dividend-growth model and is accretive on all key measures both in 2014 and 2015. According to the company, the acquisition will add a concentrated land and operating base with 6,500 boe/d, comprising 83 percent oil and NGLs, of high netback production with a low base decline rate of 16 percent and significant low risk oil reserves upside.

Whitecap will fund the acquisition with a concurrent C$500 million bought deal equity financing and debt.

Whitecap noted that pro forma the acquisition, it will have production of about 33,500 boe/d, or 72 percent oil and NGLs, and a total payout ratio of 96 percent that will reduce to 84 percent in 2015.

Further, Whitecap noted that significant free cash flow will allow it to increase its monthly dividend by 10 percent to C$0.0625 per share or C$0.75 per share annualized, from C$0.0567 per share or C$0.68 per share annualized.

IMO closed Friday's trading on the NYSE at $45.95, up $0.02 or 0.04 percent on a volume of 449,101 shares.

WCP.TO closed Friday's trading at C$11.53, down C$0.11 or 0.95 percent on a volume of 890,572 shares.