Just two months after going public, Argent Energy Trust has already closed an acquisition.
After originally buying oil and gas assets in Texas and Mississippi, the company, which is listed in Toronto but operates in the U.S., went out and bought assets, this time in Texas and Oklahoma for a purchase price of $132-million (U.S.).
While bulking up is to be expected, the deal has some interesting points. For starters, the acquired assets were originally supposed to be part of Argent's IPO, but were ultimately stripped out of the offering. So while it's unique to see a newly public firm strike an acquisition so quickly, Argent wanted these all along. Second, by adding reserves, Argent is already altering its asset mix, making it much more weighted toward oil.
When the company first launched, its reserves broke down as follows: about 30 per cent oil, 66 per cent natural gas and 4 per cent natural gas liquids. Its current production had even less weighting toward oil. However, the acquisition adds reserves that are overwhelmingly weighted toward oil, so the total reserve mix is now a 50-50 split between oil and natural gas.
To finance the latest purchase, Argent raised $127-million through a bought deal co-led by Scotia Capital, CIBC World Markets and RBC Dominion Securities.