Canadian Natural Resource Ltd (NYSE:CNQ) (TSE:CNQ), the third largest oil and natural gas producer in Canada in terms of market value, signed an agreement to acquire Barrick Energy Inc, a subsidiary of Barrick Gold Corporation (NYSE:ABX) (TSE:ABX), the largest gold producer worldwide.
Under the terms of the agreement, Barrick Gold Corporation (NYSE:ABX) (TSE:ABX) will receive a payment of $C173 million for the shares of Barrick Energy and C$50 million on gross overriding royalty on certain lands at Nipisi.
Canadian Natural Resource Ltd (NYSE:CNQ) (TSE:CNQ) will fund the deal with a combination of operating cash flow and available bank facilities.
BEI’s high quality land and production are located in Alberta and operated with a high working interest. The production base is concentrated in light oil weighted assets with strong netbacks, long reserve life and are complementary to Canadian Natural’s existing core areas.
Barrick Energy’s production is located in Alberta and it is currently producing 4,200 barrels of light crude oil and NGLs per day. It is also producing approximately 4.4 million cubic feet of natural gas per day.
Barrick Energy compliments Canadian Natural existing core assets
Canadian Natural Resource Ltd (NYSE:CNQ) (TSE:CNQ) said the acquisition of Barrick Energy compliments its existing core assets. The company also said that Nipisi has 92,160 net acres, which contains 38.6 million barrels of best estimate contingent resource based on an independent engineering report.
In a statement, Steve Laut, president of Canadian Natural Resource Ltd (NYSE:CNQ) (TSE:CNQ) said, “This acquisition further strengthens Canadian Natural’s light oil asset and production base in key operating areas and contributes to the light oil balance in the Company’s diversified portfolio. We look forward to working together with the staff currently employed by BEI.”
The company expects to complete the transaction by the end of the month subject to customary closing conditions.
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According to Barrick Gold Corporation (NYSE:ABX) (TSE:ABX), the sale of Barrick Energy and other non-core assets is part of its initiative in pursuing opportunities and optimizing its portfolio through divestiture. The company also sold some assets to Venturion Oil Limited worth C$59 million and to Whitecap Resources Inc. (TSE:WCP) worth C$174 million.
Barrick Gold Corporation (NYSE:ABX) (TSE:ABX) said the total amount of the transactions is around C$455 million. The company expects to report $500 million losses related to the sale of Barrick Energy and $90 million related to goodwill in the second quarter.