April 8, 2011 / 1:28 PM / 7 years ago

UPDATE 2-Paramount Resources to buy ProspEx for gas-liquid assets

* Deal values the company at C$140 million

* To assume $40 mln of debt

* Offer represents a premium of about 17 pct

* Shares of ProspEx up 16 pct (Adds details)

April 8 (Reuters) - Canadian oil and natural gas explorer Paramount Resources Ltd will buy the remaining stake in ProspEx Resources Ltd it does not already own for C$131.8 million to increase its exposure to liquid-rich natural gas assets.

Shares of ProspEx rose 16 percent to C$2.38, their highest in more than a year, on Friday morning on the Toronto Stock Exchange. Paramount shares fell 2 percent to C$32.56.

The deal gives Alberta-based Paramount, which already owns 9 percent in ProspEx, access to liquid-rich assets in Montney, British Columbia.

ProspEx, which acquired these assets in January, had estimated liquid reserves of 30 barrels per million cubic feet in the Upper Montney section.

Natural gas liquids, which can be stripped of components such as ethane, sell at a premium to dry gas.

Paramount is the flagship energy company of oil man Clayton Riddell, who is also a part owner of the NHL’s Calgary Flames and an investor in high-end restaurants in Canada’s oil capital.

The company said the acquisition is expected to add 2,925 barrels of oil equivalent per day in 2011, based on its development plans for ProspEx’s properties.

The deal comes more than three months after ProspEx had said it was reviewing a possible sale of the company among other alternatives. [ID:nSGE70N08Q]

Under the terms, ProspEx shareholders may elect to get 0.07162 of a Class A common share of Paramount, or C$2.40 in cash, for each share, on the condition that Paramount will issue 2 million of its shares for the deal.

The offer represents a premium of about 17 percent to ProspEx’s closing price on Thursday.

Paramount, which was advised by Peters & Co Ltd, will assume C$40 million of ProspEx’s debt.

Last year, Paramount bought the shares of Redcliffe Exploration Inc it did not already own in a cash deal, valuing Redcliffe at C$68.5 million. [ID:nSGE6490RF] (Reporting by Aftab Ahmed in Bangalore; Editing by Saumyadeb Chakrabarty)

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