PrairieSky Buying Chunk of Canadian Natural Resources Royalty Holdings for $1.8B

By Bickis, Ian | The Canadian Press, November 9, 2015 | Go to article overview

PrairieSky Buying Chunk of Canadian Natural Resources Royalty Holdings for $1.8B


Bickis, Ian, The Canadian Press


PrairieSky buying most of CNRL royalty assets

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CALGARY - Canadian Natural Resources Ltd. (TSX:CNQ) is selling most of its royalty land holdings to PrairieSky Royalty Ltd. (TSX:PSK) for $1.8 billion in stock and cash as it looks to strengthen its balance sheet in the face of low oil prices.

The friendly deal would see CNRL transfer 81 per cent of its royalty volume to PrairieSky, consisting of the equivalent of 6,700 barrels per day of oil and natural gas production, and about 21,850 square kilometres of royalty land -- nearly four times the size of Prince Edward Island.

"This is truly a win-win deal," said CNRL president Steve Laut in a conference call with analysts Monday, adding that shareholders of both companies will benefit from the combined strength and diversity of the assets.

Under the deal, PrairieSky would pay $680 million in cash and about 44.4 million of its common shares, priced at $25.20 each, for the royalty portfolio. The company says it has lined up investors to provide the $680 million in cash through a private placement of equity that's expected to close by Dec. 2.

Desjardins Capital Markets analyst Justin Bouchard said in a note that while the sale will help CNRL insulate its balance sheet, it is "by no means a game-changer."

The deal follows Cenovus Energy's (TSX:CVE) sale of its royalty business for $3.3 billion in June to the Ontario Teachers' Pension Plan as the company sought to shore up its finances. …

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