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(Reuters) - WestFire Energy Ltd WFE.TO agreed to buy Guide Exploration Ltd GO.TO for C$198.2 million ($199.21 million) in a reverse takeover to create an oil and natural gas liquids-heavy company with presence in Alberta and Saskatchewan.
Each Guide share would be swapped with 0.4167 of a WestFire share, the companies said in a statement late Wednesday.
The deal values each Guide share at C$1.94, which is 7 percent less than the stock's Wednesday close of C$2.08.
The deal will form an intermediate company, Long Run Exploration Ltd, which will be led by Guide's management team.
Its estimated production would be 26,000 barrels of oil equivalent per day (boe/d), half of which would be high-margin oil and natural-gas liquids such as ethane, propane and butane.
WestFire produced 11,549 boe/d in the second quarter while Guide produced 15,044 boe/d.
Scotia Waterous Inc, BMO Capital Markets and National Bank Financial Inc advised Guide, while Cormark Securities Inc was WestFire's adviser.
The deal is subject to approval of the shareholders of Guide and WestFire and that of the Toronto Stock Exchange and the Court of Queen's Bench of Alberta.
Shares of WestFire, valued at C$312.8 million, closed at C$4.65 on Wednesday on the Toronto Stock Exchange.
Reporting by Krishna N. Das in Bangalore; Editing by Don Sebastian