Paramount to sell some Deep Basin assets to Seven Generations
(Reuters) - Canadian oil producer Paramount Resources Ltd (POU.TO: Quote) agreed to sell some of its Deep Basin oil and gas properties in Alberta to Seven Generations Energy Ltd (VII.TO: Quote) for about C$1.9 billion ($1.47 billion).
The divestiture is the latest example of struggling oil and gas producers selling off assets in a bid to survive the global crude price rout, which has lasted since mid-June.
The transaction will help the company fund its development of the remaining assets in Montney, Duvernay and other resources, Paramount Chief Executive Jim Riddell said in a statement.
Paramount said it would receive C$475 million in cash and 33.5 million class A common shares of Seven Generations, which will also assume the company's senior unsecured notes worth about C$584 million due 2023.
Paramount had net debt of about C$1.9 billion as of Dec. 31, according to its filing.
Upon deal closure, Paramount will own a stake of about 10 percent in the natural gas developer, making it the second-largest shareholder after the Canada Pension Plan Investment Board.
Paramount said billionaire Calgary oilman Clayton Riddell, who holds about 37 percent of the company's outstanding shares, has agreed to favor the transaction.
The assets, which are located in the Musreau/Kakwa area, had estimated sales volumes of about 30,000 barrels of oil equivalent per day for the three month period ended June 30.
Paramount agreed in March to sell a natural gas processing complex in the Montney shale formation in Alberta to Pembina Pipeline Corp (PPL.TO: Quote) for C$556 million ($428.45 million) in cash. Continued...