Clearwater Oil to be created by merger of Tamarack Valley and Headwater for $7.2 billion

The companies announced on Tuesday that Canadian oil producers Tamarack Valley?and?Headwater Exploration would merge in a deal valued at C$10 Billion ($7.25 Billion) in all-stock deals.

The deal would create the largest publicly traded oil producer in Alberta, focusing on Clearwater Formation, with the core land positions across Marten Hills West, Nipisi, and Marten Hills.

Tamarack will issue approximately 237,8 million shares. Tamarack shareholders own 66.5%, while Headwater shareholders hold 33.5%.

Tamarack estimates that the combined company will produce between?65.500 and 67.500 barrels equivalents per day by 2026, on a pro-forma basis.

The companies stated that the?deal brings two producers together with low-cost and high-margin production. They also have modest reinvestment requirements, low breakeven oil prices, and low reinvestment requirements.

Separately Tamarack announced that President Steve Buytels would become CEO of the combined company and join its board on January 1, 2027. Founder CEO Brian Schmidt will then become executive chairman.

The transaction should close by the end of the fourth quarter. Tamarack will then be able to meet expected growth in Clearwater production via existing and planned pipelines in Edmonton, Alberta.

In a press release, Tamarack said that these 'expanded' options would allow it to reduce the?risk associated with local capacity constraints and gain greater exposure to diverse oil markets.

Tamarack and Headwater also plan to transfer non-core exploration into a publicly listed company called?Tributary Exploration Inc., which will be managed by Headwater’s current management.

The assets include the Mannville-stack exploration rights in Alberta, potential thermal heavy oil opportunities in Handel, Saskatchewan and legacy McCully gas production in New Brunswick.

(source: Reuters)