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Strathcona Resources cements its reputation as a strategic counter cyclical acquirer with Pipestone shareholders approval of acquisition – BOE Intel

September 27, 20232:08 PM Dan Rutherford

Today it was announced that Pipestone Energy shareholders approved the deal to be acquired by Strathcona Resources. It was a contentious few weeks amongst Pipestone shareholders as dissenting voices emerged, with both sides expressing strong opinions in the public forum.

Ultimately it seems like a big win for Strathcona and really adds to the company’s impressive reputation as a strong acquirer. Recall that since January 2020, Strathcona has been able to acquire or combine with Pengrowth, Cona, Osum, Caltex, Serafina, the Tucker assets from Cenovus, and now Pipestone Energy Corp. In hindsight, these acquisitions which began in January 2020 have been incredibly well timed. Consider that most of the Canadian energy industry was purely fighting for survival during 2020 when this string of acquisitions began.

The latest acquisition of Pipestone Energy Corp. comes at an interesting time as well, with oil and condensate prices having added ~$10/bbl from when the acquisition was first announced on August 1, 2023.

Source: TradingView — Track All Markets

Not only have oil prices recovered since the deal was announced, but the acquisition metrics looked quite cheap on comparable transaction metrics even before the recovery in oil prices. Of course keep in mind that the all stock transaction and Strathcona being (at least for now) private makes these comparables a little tricky. Also the official metrics were not part of the acquisition press release, so we used Pipestone’s Q2 average production figures. Note readers can turn your phone sideways to view the table on mobile.

See BOE Intel’s full M&A database here.

Announce Date Acquirer Target Deal Value ($) BOE/d Pct Liquids Value per BOE/D ($)
2022-06-28 Whitecap Resources XTO Energy Canada 1,700,000,000 32,000 30 53,125
2023-03-28 Crescent Point Spartan Delta Corp. 1,700,000,000 38,000 55 44,737
2023-07-31 Cygnet Energy Athabasca Oil Corporation 160,000,000 3,000 45 53,333
2023-08-01 Strathcona Resources Pipestone Energy Corp. 920,000,000* 33,143* 41* 27,759*
2023-08-03 Cygnet Energy Murphy Oil Company Ltd. 150,000,000 1,700 39 88,235

*assumed deal metrics based on public disclosure and best estimates

The following 2 charts from BOE Intel plot the evolution of Pipestone on flowing barrel metrics (EV/BOE/d) and as a multiple of cash flow (EV/OCF). The operating cash flow multiple in this case is on a trailing 12 month basis. In terms of waiting for the right time, it seems that Strathcona may have once again pulled the trigger at an opportune moment. Of course only time will tell.

Reach out here if you are interested in a demo of BOE Intel.

 

 

Athabasca Oil Cenovus Cygnet Energy Murphy Oil Pipestone Spartan Delta StackDX Intel Strathcona Resources Veren Whitecap Resources XTO Energy

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