Tourmaline Oil Corp. (TSE:TOU), an oil and gas producer focused on Western Canada, dropped to the lowest in three weeks after saying it will buy Santonia Energy Inc. (TSE:STE), an oil and natural gas energy trust, for shares and debt worth C$189.1 million.
Tourmaline dropped to C$48.80, the lowest intraday price since Feb. 13, and was trading at C$49.58, down 1.4 percent, at 3:24 p.m. in Toronto. Santonia's shares jumped 11.2 percent to C$1.49.
Calagary, Alberta–based Tourmaline said in a statement today that it is offering 0.03 of its own shares for each Santonia share, which it pegged at a value of C$1.50, a 12 percent premium to Santonia's yesterday closing price on the Toronto Stock Exchange.
The company expects to issue 3.23 million new shares to pay for the acquisition and assume C$28.3 million of Santonia's debt.
The purchase adds about 3,800 barrels of oil equivalent per day of new production to Tourmaline, whose output averaged 86,089 boepd in the fourth quarter.
The acquisition also brings 221,000 acres of exploration land in liquids-rich Deep Basin region in west central Alberta, near Tourmaline's existing properties, and 24.2 million barrels of oil equivalent of proved and probable reserves.
The deal is expected to close by the end of April.