Dana Petroleum has agreed to buy Canada-based Bow Valley Energy for $177 million, adding to a trend of financially strong North Sea players acquiring rivals hit by low oil prices and financing problems.
Dana Chief Executive Tom Cross said in a statement that Bow Valley's North Sea assets were a “close fit” with Dana's existing assets in the region.
Dana said it will buy all outstanding shares of Bow Valley for C$0.50 per share in cash, compared to a closing price of $0.295 on Friday.
Bow Valley shares traded above C$6 last July but the company was subsequently forced to put itself up for sale after it ran into difficulties refinancing big debts.
Dana expects the takeover to boost its daily production 20% in the coming months. Bow Valley also has exploration acreage in Alaska.
Dana is financing the deal with a $400 million revolving credit facility from Bank of Scotland, which could also be used to make further acquisitions, Dana said.
Canadian oil producer Oilexco's North Sea unit was placed in administration last month following financing problems and analysts predict a rash of consolidation in the sector. (Reuters)