CALGARY – Energy junior Alexander Energy Ltd. (TSXV:ALX) is taking over Renegade Petroleum Ltd. (TSXV:RPL) in a friendly, $495-million stock-based deal.
The combined company — to be named Spartan Energy Corp. — will be focused on developing light oil in Saskatchewan.
Spartan will be led by Alexander’s current management team and board of directors.
Based on Alexander’s five-day weighted average stock price, the deal is worth $1.55 per share — a 65 per cent premium over Renegade’s trading price over that period.
The transaction follows a tumultuous period for Renegade. Last spring, it kicked off a formal process to weigh its strategic alternatives.
In the following months, some of its top brass parted ways with the company, including its CEO and board chairman in October. Last month, it fended off a challenge from dissident shareholder FrontFour Capital Group LLC.
In a release, Alexander says Spartan would have production of 6,150 barrels of oil equivalent per day, 93 per cent of which would be in valuable liquids.
“This transaction will establish a significant presence for Spartan in southeast Saskatchewan and will position the company for continued growth and success,” said Alexander CEO Rick McHardy.
“This is the second high quality acquisition since the recapitalization of Alexander just two months ago, and a key strategic step in our growth towards becoming an oil-focused intermediate producer in the coming years.”
Renegade’s interim CEO, Andrew Greenslade, said Alexander’s management team has a good track record.
“We are proud of the high quality assets that our team has put together and is contributing to the transaction. The combined company represents an exciting opportunity for Renegade shareholders to retain their exposure to the upside inherent in these assets, and participate in a larger, more liquid, light-oil focused entity with a substantial platform for growth.”
Renegade shares closed up 30 per cent on the TSX Venture Exchange at $1.30, while Alexander’s dropped more than eight per cent to 65 cents.