CALGARY — Shareholders in Seven Generations Energy Ltd. have voted to approve a merger with fellow Calgary-based producer Arc Resources Ltd. to create Canada’s sixth largest oil and gas company.
At a brief special virtual meeting on Wednesday, shareholders heard that enough shares had already been voted by proxy to carry the motion in favour of the deal, which is valued at $8.1 billion including debt. It required two-thirds approval to proceed.
At a second meeting today, ARC shareholders are to vote on whether to issue 1.108 shares for each share of Seven Generations as arranged under the deal announced in February, thus valuing Seven Generations at about $2.86 billion at Tuesday’s Arc closing price of $7.76.
The deal also requires court and other regulatory approvals.
The combined company is to operate as Arc Resources and remain headquartered in Calgary. Arc chairman Hal Kvisle and CEO Terry Anderson are to continue in their roles while Seven Generations CEO Marty Proctor is to become vice-chair.
Arc and Seven Generations say they expect to generate cost savings from synergies of about $110 million per year by 2022 while continuing to pay Arc’s quarterly dividend of six cents per share.
The merged company is to be Canada’s largest producer of condensate, a light oil prized as a diluent to be mixed with oilsands bitumen so it will flow in a pipeline. It would be its third-largest natural gas producer.
Overall combined production is expected to total more than 340,000 barrels of oil equivalent per day this year, composed of about 138,000 barrels per day of liquids like condensate and 1.2 billion cubic feet per day of natural gas.
The companies are among the largest drillers into the Montney, a sprawling underground formation that straddles the Alberta-B.C. border.
This report by The Canadian Press was first published March 31, 2021.
Companies in this story: (TSX:VII, TSX:ARX)
The Canadian Press