Canadian Natural Resources Ltd. and PrairieSky Royalty Ltd., both of Calgary, have agreed to combine their royalty businesses into what will become Canada’s largest independent oil and gas royalty position, owned by PrairieSky.
CNRL will receive $680 million (Can.) in cash and new PrairieSky shares worth about $1.12 million in exchange for 5.4 million acres of royalty land in western Canada with oil and gas production of about 6,700 boe/d. The acquired land includes 2.2 million acres of fee simple mineral title land.
CNRL agreed to distribute to its shareholders enough PrairieSky shares to keep its ownership of the company below 10%.
The transaction represents about 81% of CNRL’s royalty production.
Through a leasing arrangement and drilling commitment with PrairieSky on part of the fee simple mineral title lands to be transferred, CNRL preserved the right to develop a core area on about 104,000 acres of undeveloped land in western Saskatchewan which it believes holds heavy-oil potential.
The land position after the combination—totaling 14.7 million acres of royalty land, including 7.7 million acres of fee simple mineral title excluding coal—covers the Viking light oil play in western Sakatchewan and the multizone Deep basin fairway of Alberta and British Columbia.
