Calgary, Alberta-based Baytex will pay a mixture of cash and stock to buy Ranger at a small premium to its current market value of $1.8 billion. It will also assume Ranger’s debt pile, which stood at $603 million as of Sept. 30.
The transaction will significantly boost Baytex’s presence in South Texas’ Eagle Ford shale basin, which currently represents around 30% of its total production, according to its website.
An agreement between Baytex and Ranger could be announced as soon as Tuesday, barring any last-minute hitches, added the sources, who spoke on condition of anonymity to discuss confidential information.
Baytex and Ranger did not immediately reply to requests for comment.
Reuters reported in November that Houston-headquartered Ranger was considering a sale. The Eagle Ford basin has witnessed a flurry of merger and acquisition activity in recent months, with buyers lured by its proximity to major energy hubs, including export and refining facilities on the U.S. Gulf coast.
Baytex’s deal would add to the run of Canadian energy operators seeking to boost the amount they produce south of the border. Ovintiv Inc moved its headquarters to Denver, from Calgary, at the start of 2020 as it prioritized its U.S. assets. Enerplus Corp completed in December the sale of its Canadian operations, leaving it with assets in North Dakota and Pennsylvania.
(Reporting by David French in New York Editing by Matthew Lewis)