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Calgary energy giants announce $1.9B deal

Pumpjacks pump crude oil near Halkirk, Alta., June 20, 2007 .
Pumpjacks pump crude oil near Halkirk, Alta., June 20, 2007 . THE CANADIAN PRESS/Larry MacDougal

Calgary-based Paramount Resources (TSX:POU) is entering into a $1.9-billion deal to sell most of its oil and natural gas producing assets in western Alberta to Calgary rival Seven Generations Energy (TSX:VII).

Under the transaction announced after markets closed Wednesday, Paramount would receive $475 million in cash and Seven Generations shares worth about $837 million. In turn, Seven Generations would take on about $584 million worth of Paramount’s debt.

The deal would give Seven Generations control of about 80,000 hectares of land producing some 30,000 barrels of oil equivalent per day. Paramount would become a much smaller company, with about 10,500 boe/d in production.

Paramount CEO Jim Ridell said the deal offers a premium return for shareholders while reducing debt as well as ongoing benefits through Paramount’s resulting ownership of 10 per cent of Seven Generations’ stock.

Pat Carlson, CEO of Seven Generations, said the acquired lands provides operational and investment synergies to drive expansion.

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Paramount said it has agreed to pay $80 million to Seven Generations in certain circumstances if the deal does not proceed. It must be approved by two thirds of shareholders because it involves a substantial percentage of Paramount’s assets, the company said.