Calgary-based oil and gas producer Vermilion Energy (TSX:VET) announced on Monday that it has reached an agreement to acquire privately-held oil and gas company Westbrick Energy for CAD 1.075 billion. This transaction will strengthen Vermilion’s position in Alberta’s Deep Basin, making it the fifth-largest producer in the region.
Shares of Vermilion Energy, listed on the US stock exchange, rose 1.4% in pre-market trading to $8.99.
Vermilion’s CEO, Dion Hatcher, stated that the Deep Basin is currently the company’s largest producing asset, and the acquisition will “significantly enhance the inventory depth and quality of the company’s Deep Basin assets.” He added that the transaction will bring an additional production capacity of 50,000 barrels of oil equivalent per day (boe/d) and approximately 77,000 net acres of land. Vermilion has identified over 700 potential drilling locations on this land.
The Deep Basin is a crucial natural gas production area in Canada. In addition to increasing production and providing assets for long-term growth, the acquisition is also expected to create synergies, improving Vermilion’s capital efficiency and financial performance. The company plans to fund the acquisition using its remaining CAD 1.35 billion revolving credit facility.
Last week, Vermilion announced an increase in its dividend from CAD 0.12 per share to CAD 0.13 per share and unveiled its 2025 capital expenditure plan. The plan, ranging from CAD 600 million to CAD 625 million, includes drilling and infrastructure projects across the company’s operations.
The deal is expected to close in the first quarter of 2025.
