Core Viewpoint - Whitecap Resources Inc. and Veren Inc. are merging to form a leading light oil and condensate producer, becoming the largest landholder in Alberta's Montney and Duvernay regions, aiming to enhance profitability and shareholder returns [1][2][3] Strategic Rationale - The merger will create a company with an enterprise value of approximately $15 billion and a production capacity of 370,000 boe/d, with 63% of production being liquids [4][6] - The combined entity will be the largest Canadian light oil producer and the seventh largest in the Western Canadian Sedimentary Basin, with significant natural gas growth potential [4][6] - The merger will result in the largest producer in the high-margin Kaybob Duvernay and Alberta Montney, with about 220,000 boe/d of unconventional production [4][6] - The combined company will hold 1.5 million acres in Alberta, with over 4,800 total development locations to support future production growth [4][6] - The merger is expected to be immediately accretive to Whitecap's standalone funds flow per share by 10% and free funds flow per share by 26% [4][6] Financial Summary - The forecasted annualized funds flow for the combined company is $3.8 billion, based on commodity prices of US$70/bbl WTI and C$2.00/GJ AECO [6] - After annual capital investments of $2.6 billion, the free funds flow is projected to be $1.2 billion [6] - The combined company will have an exceptional balance sheet with initial leverage of 0.9 times net debt to funds flow, expected to strengthen to 0.8 times by the end of 2026 [4][5] Combination Structure Details - The transaction is structured as an all-share deal, valued at approximately $15 billion, where Veren shareholders will receive 1.05 common shares of Whitecap for each share held [2][8] - Post-transaction, Whitecap shareholders will own approximately 48% and Veren shareholders will own about 52% of the combined company [8] Governance and Leadership - The combined company will be led by Whitecap's existing management team, with four directors from Veren joining the Board of Directors [2][12] - The Board will consist of eleven members, including seven from Whitecap and four from Veren [12] Future Growth and Value Creation - The merger is expected to enhance the combined company's market relevance and drive multiple expansion to valuations aligned with large-cap peers [12][25] - The combined company will continue to pay Whitecap's annual dividend of $0.73 per share, representing a 67% increase for Veren shareholders [12][25]
WHITECAP RESOURCES AND VEREN TO COMBINE IN A $15 BILLION TRANSACTION TO CREATE A LEADING CANADIAN LIGHT OIL AND CONDENSATE PRODUCER