Independent energy explorer
Canadian Natural Resources Ltd.
) has agreed to acquire certain liquids-rich natural gas
properties in western Canada from Oklahoma City-based
Devon Energy Corp.
) for C$3.125 billion ($2.86 billion) in cash.
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The market reacted positively to the news, which was announced
before market hours on Wednesday, Feb 19. Shares of Canadian
Natural ended at $36.69 on that day - up 2.6% from Tuesday's
The to-be-bought assets - adjacent to Canadian Natural's existing
fields in the region - hold an estimated 272.2 million
oil-equivalent barrels (MMBOE) in proved reserves (70% gas) and
will add 86,633 BOE to the nation's largest heavy oil outfit's
daily production. Other constituents of the deal include 2.2
million acres of undeveloped land, 2.7 million acres of royalty
lands, six natural gas plants and added infrastructure
The potential acquisition - which is likely to be sealed by Apr 1
subject to customary closing conditions - is expected to be
immediately accretive to Calgary, Alberta-based Canadian
Natural's production, cash flows and profits. Importantly, the
addition of the acreage and infrastructure will boost growth
prospects of the company in its core areas, with possibility to
further enhance value in the future.
Canadian Natural is engaged in the acquisition, development and
exploration of crude oil and natural gas properties. It is one of
the largest independent exploration and production companies in
Canada, with extensive heavy crude oil and natural gas
The company's large, diversified oil and gas asset bases,
together with international exposure and a well-balanced blend of
conventional and unconventional prospects, provides a buffer
against sectoral uncertainties.
Canadian Natural currently retains a Zacks Rank #3 (Hold),
implying that it is expected perform in line with the broader
U.S. equity market over the next one to three months.
However, some better-ranked Canadian upstream energy stocks
Crescent Point Energy Corp.
Bellatrix Exploration Ltd.
). Both these entities - sporting a Zacks Rank #2 (Buy) - have
solid secular growth stories with potential to rise from current