- Offer to purchase Bonterra extended to January 25, 2021
- Minimum tender condition lowered to 50% of Bonterra Energy Corp.’s outstanding shares
- Improved valuation following Obsidian Energy Ltd. share price up 110% in the last month, compared to 4% for Bonterra Energy Corp.
OBSIDIAN ENERGY LTD. announced that the Company has extended its offer to purchase all of the issued and outstanding common shares of Bonterra Energy Corp. to 5:00 p.m. (Mountain Standard Time) on Monday, January 25, 2021. The extension provides Bonterra shareholders an additional opportunity to fully evaluate the Offer’s ability to create a stronger, well-positioned company with a far superior future, reflect on recent changes in the relative value of Obsidian Energy and Bonterra, and recognize the positive impact of recent industry consolidation announcements on share price performance.
“Our Offer is a compelling opportunity for Bonterra shareholders to be part of an efficient, competitive company with a solid future,” said Stephen Loukas, Obsidian Energy’s Interim President and CEO. “Since we made our original offer, industry consolidation has accelerated over the past few months as boards seize opportunities to build increased scale, efficiency and resilience. We expect this trend to continue and we urge Bonterra shareholders to take advantage of this opportunity. Together, we can make a stronger entity that can make meaningful improvements to cash flow and inroads to lower debt levels, which we believe has a clear path to a higher share price.”
In Canada, recent consolidation announcements have spanned companies of all sizes, including the merger of large cap companies Cenovus Energy Inc. and Husky Energy Inc., and an accelerated pace of consolidation in the mid-cap space with recent transactions announced by Whitecap Resources Inc., Tamarack Valley Energy Ltd. and Tourmaline Oil Corp. Obsidian Energy’s Offer builds on this industry consolidation activity, creating a highly competitive, efficient combined entity that management believes will be uniquely positioned as the natural consolidator in the Cardium and be able to benefit from further consolidation opportunities. Together, complementary assets and combined resources are expected to result in significant efficiencies. Obsidian Energy estimates that the combined entity can save approximately $50 million in the first year (equivalent to more than 80% of the value of all the outstanding Bonterra Shares) and a total of $100 million in the first three years.
Over the past month, Obsidian Energy’s share price has more than doubled as the market recognized the Company’s continued strong operational and financial performance, an improved oil price outlook and the initiation of a winter drilling program. In addition, the share price reflected strong shareholder approval of the share issuance related to the Offer and recommendations in support of the Offer by independent proxy advisory firms to Obsidian Energy’s shareholders. Management believes the Offer has always been compelling for Bonterra shareholders, providing strong operational synergies that are expected to lower corporate breakeven prices, improve the combined entity’s financial performance and drive significant anticipated share price improvement. Now, with the Company’s improved share price, the Offer exchange ratio of two (2) Obsidian Energy shares (the “Obsidian Shares“) for each Bonterra share aligns with current trading levels for Bonterra and Obsidian Energy.
