An oil and gas exploration company Canadian Natural said on Wednesday said that it plans to acquire Devon Energy’s northern Alberta oil sands and heavy oil operations for $2.8 billion.
The company’s shares fell in trading in Toronto but quickly bounced back as industry analysts found the price of $29,400 per flowing barrel of daily production attractive for the buyers. The company’s shares rose in nearly two months, media reports stated.
Canadian Natural’s Executive Vice Chairman Steve Laut said the deal is a ‘win-win’ for both companies. This is because it gives Devon a possibility to exit Canada and an opportunity for Canadian Natural to capitalise on the ‘economies of scale’ and make the most of the technical as well as the operating expertise. With that, the company will be able to ‘add incremental value from these very high-quality assets’.
“It is the textbook definition of an excellent fit,” he said.
Devon’s Jackfish oil sands project south of Fort McMurray is located adjacent to Canadian Natural’s Kirby North and Kirby South projects. The asset’s location appears to be a great fit for Canadian Natural.
Devon Chief Executive Dave Hager said in a statement that the transaction ‘creates value’ for the company’s shareholders by being able to make timely exit from Canada.
The deal marks Canadian Natural’s seventh major acquisition since 2014, CBC said. Bloomberg said that the deal is Devon’s second major acquisition in the oil sands in the past two years after the Royal Dutch Shell acquisition in 2017.