Canadian oil and gas exploration and production firm Tourmaline Oil Corp. on Oct. 10 announced the formation of a new private royalty and infrastructure energy company called Topaz Energy Corp.
Topaz will be initially capitalized with third-party equity placement of C$150 million to C$200 million with Tourmaline keeping a 75% to 81% equity interest. Tourmaline plans to reduce its stake as the new firm participates in future acquisitions and an anticipated public liquidity event in 2020.
In addition, Tourmaline will sell a royalty interest on its lands, a 45% non-operated interest in two of the company's natural gas processing plants and a contracted interest in a portion of the firm's current third-party revenue to Topaz for C$775 million. The initial acquisition is expected to generate approximately C$90 million in revenue in 2020 with 75% possibly paid out in quarterly dividends.
According to Tourmaline, the transaction will have a minimal impact on its forecast 2020 cash flow and no impact on its current exploration and production plans.
Following the completion of the deal and the private placement, Topaz will have a majority independent board and will be initially managed via a management contract with Tourmaline.
The deal with Topaz is expected to close in mid-November, subject to customary closing conditions and regulatory approvals. Peters & Co. Limited is acting as Topaz's exclusive financial adviser.
