Cona adds to heavy oil producer status with Pengrowth acquisition

Cona Resources Ltd., Alberta, a portfolio company of Waterous Energy Fund (WEF), closed on its acquisition of Pengrowth Energy Corp., Calgary, for $740 million (Can.), making it the largest privately-owned heavy oil producer in North America with production of 35,000 boe/d, the company said Jan. 7.

Cona acquired the company by way of a plan of arrangement under the Business Corporations Act (Alberta).

In March 2019, Pengrowth began a strategic review of the company after reporting a fourth-quarter 2018 net loss of $503 million (Can.) (OGJ Online, Mar. 7, 2019). At that time, the company reported proved and probable reserves of 446.5 million boe of oil and natural gas. Its average production in the last 3 months of 2018 was 24,104 boe/d of oil and gas.

For Cona, which holds operations, infrastructure, and concentrated land position focused in southwest Saskatchewan, the acquisition enhances its “long life, low-decline asset base and adds a trophy asset in Pengrowth's Lindbergh oil property in the Cold Lake area of Alberta,” said Adam Waterous, founder and chief executive officer of Waterous Energy Fund.

The acquisition, which was approved by both Pengrowth's shareholders and debtholders at special meetings held on Dec. 18, 2019, was funded with a $585 million (Can.) equity investment from WEF and debt under an expanded credit facility from a consortium of Canadian banks.