Insider Brief
- Whitecap Resources and Veren Inc. have agreed to a $15 billion all-share merger, creating one of Canada’s largest light oil and condensate producers with major holdings in the Alberta Montney and Duvernay formations.
- The combined company will produce approximately 370,000 barrels of oil equivalent per day and expects to achieve over $200 million in annual cost savings through operational and financial synergies.
- Whitecap’s leadership will oversee the merged entity, with Veren’s President and CEO, Craig Bryksa, joining the board, and the transaction is expected to close before May 30, 2025, pending shareholder and regulatory approvals.
Whitecap Resources and Veren Inc. have agreed to merge in an all-share deal valued at $15 billion, creating one of Canada’s largest light oil and condensate producers, according to a statement from the company. The transaction, expected to close before May 30, 2025, will make the combined company the largest landholder in the Alberta Montney and Duvernay formations and a major oil producer in Saskatchewan.
Whitecap runs a large-scale carbon sequestration initiative, capturing CO₂ from two major industrial sources and transporting it to its existing carbon storage hub near Weyburn, Saskatchewan.
Under the terms of the deal, Veren shareholders will receive 1.05 Whitecap shares for each Veren share. Whitecap’s current leadership will oversee the new company, which will continue operating under the Whitecap name. Veren’s President and CEO, Craig Bryksa, will join Whitecap’s board along with three other Veren directors.
Whitecap CEO Grant Fagerheim said in a statement that the combination saiddthat the merger strengthens both companies’ ability to generate profits and returns for shareholders.
The combined company will have an enterprise value of $15 billion and produce approximately 370,000 barrels of oil equivalent per day (boe/d), of which 63% is liquids. It will become the largest Canadian light oil-focused producer and the seventh-largest overall in the Western Canadian Sedimentary Basin.
The merger significantly expands Whitecap’s holdings in the Montney and Duvernay, two of Canada’s most productive oil and gas regions. The combined company will have 220,000 boe/d of unconventional production and hold 1.5 million acres of land. With over 4,800 identified drilling locations in these areas, the company sees decades of potential production growth.
In Saskatchewan, the combined entity will be the second-largest producer, with significant conventional oil production. The company plans to continue using waterflood recovery techniques, which slow decline rates and sustain output. The Saskatchewan assets are expected to generate steady cash flow with approximately 7,000 additional drilling opportunities.
The deal is expected to immediately increase Whitecap’s cash flow per share by 10% and free cash flow per share by 26%, excluding potential cost savings from the merger. The companies anticipate operational and financial synergies of more than $200 million annually, independent of oil and gas prices.
Fagerheim said: “We are excited to bring together two exceptionally strong asset bases to create one world-class energy producer with one of the deepest inventory growth sets of both liquids-rich Montney and Duvernay opportunities, along with conventional light oil opportunities in some of the most profitable plays in the Western Canadian basin. Our combined company will include exceptional technical and support personnel from the two companies in both the office and field and an experienced Board of Directors that prioritizes sustainable and profitable growth to generate strong returns for our combined shareholders. We look forward to bringing Whitecap and Veren together and providing increased value to both sets of shareholders well into the future.”
Bryksa added that the deal strengthens the company’s balance sheet and enhances its financial position.
“This strategic combination unlocks significant value for all shareholders and together positions us as a stronger, more resilient company,” Bryksa said in the statement. “With enhanced scale, deep inventory, and increased free funds flow generation, we’re building a business with a differentiated competitive advantage. Our combined balance sheet reinforces our financial strength and enhanced credit profile, ensuring the long-term success in an evolving market. Together we’re unlocking synergies, creating new opportunities, and setting the stage for sustainable growth.”.
The merger will improve the company’s credit profile, with initial leverage of 0.9 times net debt to cash flow, projected to drop to 0.8 times by the end of 2026. Both Whitecap and Veren have investment-grade credit ratings, and the increased scale of the company could lower borrowing costs.
Whitecap plans to maintain its annual dividend of $0.73 per share, representing a 67% increase for Veren shareholders. Following the merger, Whitecap shareholders will own approximately 48% of the combined company, while Veren shareholders will hold the remaining 52%.
The transaction requires shareholder approval from both companies. Whitecap and Veren’s boards of directors have unanimously recommended the deal, and a shareholder vote is scheduled for May 6, 2025. Regulatory approvals and a review by the Court of King’s Bench of Alberta are also required before the merger can proceed.
Financial firms National Bank Financial and TD Securities advised Whitecap on the deal, while BMO Capital Markets and Scotiabank advised Veren. Legal counsel for the transaction includes Burnet, Duckworth & Palmer LLP for Whitecap and Norton Rose Fulbright Canada LLP for Veren.
A joint information circular with further details will be sent to shareholders in mid-April 2025.
