Headwater Exploration signs $100M deal to buy Cenovus’s Marten Hills assets

The Cenovus logo is seen at the company's headquarters in Calgary, Alta., on November 15, 2017. THE CANADIAN PRESS/Jeff McIntosh

Headwater Exploration Inc. has signed a deal with Cenovus Energy Inc. to buy Cenovus’s assets in the Marten Hills area of northern Alberta for approximately $100 million in cash and stock.

Under the deal, Headwater says it will acquire 2,800 barrels per day of medium oil production and 270 net sections of rights in the Clearwater formation.

Read more: Calgary’s mayor worries mega-merger by energy giants will mean lost jobs and revenue

The company has agreed to pay $35 million in cash and issue 50 million common shares of Headwater and 15 million purchase warrants exercisable at $2.00 per common share with a three-year term.

Cenovus will own a 26 per cent stake in Headwater and will be entitled to appoint two nominees to the board of directors.

Story continues below advertisement

Headwater has also given Cenovus the ability to participate in Headwater’s future equity financings based on its pro rata ownership level as long as Cenovus holds at least a 20 per cent stake in the company.

Read more: Cenovus Energy shares plummet on news of its $3.8B deal to buy Husky Energy

Cenovus chief executive Alex Pourbaix called it a unique opportunity to partner with a respected management team to accelerate development at Marten Hills.

“These are high-quality assets that were unlikely to receive near-term funding from Cenovus, and we believe this transaction will provide compelling value for Cenovus shareholders over the long term,” Pourbaix said.

Sponsored content