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.
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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.