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Second Wave Petroleum gets proposals, may look at sale

Second Wave might not have the finances to develop its assets at Beaverhill Lake because of the area’s low cost of production

Kevin Van Paassen/The Globe and Mail/Kevin Van Paassen/The Globe and Mail

Canada's Second Wave Petroleum Inc. said it had received unsolicited proposals and is exploring strategic alternatives, including a potential sale, sending the oil and gas producer's shares up as much as 17 per cent.

The Calgary, Alta.-based company, which has its primary assets in Judy Creek and Beaverhill Lake in Alberta, did not name the potential suitors.

On Tuesday, Second Wave reported an 87-per-cent increase in its proved and probable reserves at 10,950 million barrels of oil equivalent, mainly due to increased light-oil drilling in Beaverhill Lake.

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"Second Wave has done its job by proving that resources exist in the [Beaverhill Lake]area. Now the development becomes more conclusive if a big guy gets in," Acumen Capital analyst David Doig told Reuters.

He named Pengrowth Energy Corp. and Crescent Point Energy Corp. among the likely contenders and added that Second Wave, currently valued at about $250-million, could fetch a premium of about 50 to 70 per cent.

Apart from putting itself on the block, Second Wave could also look at a sale of a material portion of its assets, a merger or other strategic transactions, the company said.

"It was sort of expected as Second Wave's assets in Alberta are quite attractive and there are a lot of big players down in the area," Mr. Doig said.

Second Wave might not have the finances to develop its assets at Beaverhill Lake, where companies such as Pengrowth and Crescent Point are pouring in big money because of the area's low cost of production, he said.

Second Wave has hired RBC Dominion Securities Inc. as its financial adviser.

Shares of the company jumped 17 per cent to a high of $3.52, before paring some gains to trade at $3.40 Tuesday morning on the Toronto Stock Exchange. It was one of the top percentage gainers on the exchange.

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