The Calgary headquartered Oil and Gas giant Canadian Natural Resources Ltd. has announced it is to acquire the Canadian oilsands and heavy oil assets of U.S. company Devon Energy.
The company will pay approximately CA$3.78bn (US$2.8bn), subject to regulatory approval. The assets, which are mostly in Alberta, were put up for sale in February of this year as part of Devon’s decision to exit Canada to focus on its U.S. operations. Their location dovetails with Canadian Natural’s core area of Western Canada.
Canadian Natural’s President Tim McKay said: “These high quality assets complement our existing asset base and provide further balance to our production profile, while not increasing the need for incremental market access out of western Canada, as it is already existing production. The assets provide us the opportunity to add value through synergies, including facility consolidation and operating and marketing efficiency opportunities, with targeted benefits of CA$135 million on an annualized basis. Through economies of scale, as well as complementary research and development efforts, we target to leverage technology advancements across the combined portfolio to drive continuous improvement, cost reductions and production optimization.”
The assets are also said to include some 1.5 million acres of land, of which 1 million acres are undeveloped, which Canadian Natural said provides significant upside value and opportunities.
“This acquisition is a great fit for Canadian Natural resulting in a win for both parties and provides further balance to our diverse portfolio,” said Canadian Natural’s Executive Vice-Chairman Steve Laut. “Canadian Natural will now have thermal in situ productive capacity of approximately 320,000 bbl/d, with targeted 2019 exit production of approximately 250,000 bbl/d. This productive capacity provides Canadian Natural with significant opportunities to grow production volumes at very attractive economics, through leveraging the significant existing infrastructure at each of Jackfish, Kirby South, Kirby North and Primrose.
“The ongoing opportunity to leverage technology, innovation and drive synergies is further enhanced through the economies of scale gained. We welcome to Canadian Natural approximately 735 new employees from Devon, comprised of both field and head office personnel, and look forward to capturing their ideas and energy, and creating successes as we have done in the past with Devon employees who have joined us.”
As reported by CBC, the deal builds on Canadian Natural’s 2014 acquisition of Devon’s non-heavy oil assets for CA$3.12bn.