The Birch property of Athabasca Oil Corp.Lenny Lane
Murphy Oil Corp. is buying interests in Athabasca Oil Corp.'s oil and gas assets in Alberta for $250-million, increasing the tempo of merger and acquisition activity in the struggling oil patch.
Under the deal, El Dorardo, Ark.-based Murphy will get 70 per cent of Athabasca's Kaybob-region holdings in the Duvernay area – known for large and largely untapped reserves of natural gas rich in liquid hydrocarbons. Murphy will also pick up 30 per cent of the Calgary-based company's Montney lands, known as Greater Placid.
Murphy has agreed to carry up to $225-million of Athabasca's costs over five years. Total spending by both companies in the regions is currently pegged at $1-billion over the period, but could change depending on market conditions.
The transaction ratchets up the deal pace amid growing pressure on companies to jettison assets as a way to deal with the slump in oil and gas prices. The last major deal was Suncor Energy Inc.'s $4.2-billion takeover bid for Canadian Oil Sands Ltd., negotiated earlier this month after an unsuccessful hostile bid.
Athabasca had been seeking a partner for its Duvernay properties for well over a year. It said on Wednesday that it will maintain control of its oil and gas pipeline and processing assets in the region.
Once the deal closes, the company, whose shares have been under severe pressure, will have $900-million in cash and equivalents, as well as a remaining promissory note due from PetroChina following a sale of oil sands assets in 2014, it said.
Meanwhile, Murphy has sold two natural gas plants in northeastern B.C. to Enbridge Inc. for $538-million, Enbridge said Wednesday.
Jeffrey Jones