Warm, fuzzy feelings towards natural gas helped ARC Energy Trust finance its latest acquisition on terrific terms Monday, as the company staged a $200-million bought deal.
With investors still absorbing Exxon Mobil's $31-billion (U.S) endorsement of natural gas, shown in the XTO Energy takeover, ARC announced a $180-million (Canadian) purchase of properties in northern Alberta, and a buy in of the remaining 30 per cent stake in one of its gas plants. In a research report Tuesday that looked at the potential of these new properties, Peters & Co. analyst Jeff Martin said ARC "has been active in the area for several years. Earlier this year, it tested horizontal multi-frac wells into tighter areas of the pool (South and East) with good results."
To finance the acquisitions, ARC sold 10.3 million units to a syndicate of dealers led by RBC Dominion at $19.40 each. The bought deal equity sale played out at a thin 3 per cent discount to where ARC units closed Monday on the Toronto Stock Exchange. In recent months, bought deals have typically played out at a 6-per-cent-plus discount.
ARC said new horizontal drilling technologies have increased its ability to extract natural gas from properties such as its newly acquired Alberta land, and changed the economics of energy acquisitions.