Baytex Energy, Raging River Exploration form $5 billion company

By Patrick C. Miller | June 19, 2018

Two companies based in Calgary, Alberta—Baytex Energy Corp. and Raging River Exploration Inc.—have agreed to a merger with an enterprise value of about $5 billion that will operate under the Baytex name.

Baytex Energy is an oil and gas company engaged in the acquisition, development and production of crude and natural gas in western Canada’s Sedimentary Basin and in the Eagle Ford shale play of Texas. About 80 percent of Baytex's production is crude and natural gas liquids. Raging River Exploration is a junior oil and gas producer focused in the Kindersley area of Saskatchewan.

The Baytex board of directors and the Raging River board unanimously approved the transaction and received fairness opinions from their respective financial advisors. The transaction is subject to approval by the shareholders of both companies, the Court of Queen’s Bench of Alberta and certain regulatory and other authorities. It’s subject to the satisfaction or waiver of other closing conditions and is expected to close in August 2018.

“We are uniting two strong oil companies with exceptional people and assets,” said Neil Roszell, executive chairman and CEO of Raging River, who will serve as Baytex chairman. “This combination creates a diversified, well-capitalized oil producer that has an impressive suite of high quality producing assets and the ability to materially advance our East Duvernay shale light oil opportunity, while continuing to develop our Eagle Ford, Viking, Peace River and Lloydminster core assets.”

The transaction results in holders of common shares of Raging River receiving, directly or indirectly, 1.36 common shares of Baytex shares for each Raging River share owned. The exchange ratio was determined based on the market trading levels of the Baytex shares and Raging River shares at the time the companies entered into negotiations.

“We believe the combined company will deliver a powerful combination of industry-leading returns, attractive production growth and strong free cash flow generation,” said Edward LaFehr, president and CEO of Baytex, who will serve in the same capacity after the merger. “The combined company has a dominant 260,000 net acre position in the emerging East Duvernay shale oil play, which has the potential to compete for capital with the best plays in North America.”

The combined company is expected to have production of approximately 94,000 barrels of oil per day equivalent from a portfolio of assets that include the Viking, Peace River, Lloydminster and East Duvernay shale in Canada and the Eagle Ford in Texas.

Production will be comprised of approximately 83 percent liquids (45 percent light oil and condensate, 28 percent heavy oil, 10 percent NGL and 17 percent natural gas). By geography, production will be weighted approximately 62 percent from Canada and 38 percent from the U.S.