Paramount Resources Ltd. agreed to sell its oil and gas properties in the Kakwa region of western Alberta to the private producer Strath Resources Ltd. for C$340 million in total consideration.
Paramount would divest the properties and related infrastructure, located at Resthaven/Jayar in the Kakwa region of the Montney Shale, in exchange for C$170 million in cash, 85 million Strath common shares and 10-year warrants to acquire 8.5 million Strath common shares, according to a June 14 news release. The deal would result in Paramount owning a 16% equity interest in Strath. As part of the deal, Paramount President and CEO Jim Riddell would also join Strath's board of directors.
The assets include 201 sections of land with proved reserves of about 6.3 million barrels of oil equivalent and proved plus probable reserves of about 8.1 MMboe as of Dec. 31, 2017. The properties yielded about 5,300 boe/d, 36% of which is liquids, in April on a restricted basis.
With the divestiture, Paramount plans to focus on the development of its core Montney assets at Karr and Wapiti in the Grande Prairie region and its Montney and Duvernay assets in the Kaybob region. By receiving a stake in Strath, Paramount said it will be able to capture the upside of the Resthaven/Jayar assets as well. Paramount plans to use the cash proceeds to fund its CapEx program for 2018.
The transaction is scheduled to close in early July.
Paramount is a liquids-focused oil and gas producer with assets primarily located in Alberta and British Columbia. Strath has a liquids-rich Montney position adjacent to the assets in the deal, and is financially backed by the private equity firm Waterous Energy Fund.