Tourmaline Oil Corp., Canada’s largest natural gas producer, has announced its acquisition of Crew Energy for approximately C$1.3 billion, or $950 million. This strategic move is part of Tourmaline’s expansion efforts, as the company anticipates a rise in natural gas prices.
Both Tourmaline and Crew Energy operate within the Montney Formation and the Alberta Deep Basin, recognized as the largest natural gas reservoirs in Canada. In a statement, Tourmaline emphasized the significance of these areas in its growth strategy.
Speaking to the Calgary Herald, Tourmaline’s Chief Executive Mike Rose commented on the timing of the deal, saying, “Generally, the right time for deals is at the bottom of cycles, and we think we are near, at, or past the bottom in the natural gas pricing cycle.”
Rose expressed optimism about the future of Canadian and North American natural gas, pointing to the doubling of LNG capacity in the U.S. and the upcoming launch of Canadian LNG projects on the West Coast.
The acquisition price represents a 72% premium over Crew Energy’s last closing price before the deal, underscoring Tourmaline’s commitment to growth. “This is one of the largest takeout premiums we’ve seen in a long time in Canadian oil and gas,” noted Jeremy McCrea, an analyst at BMO Capital Markets.
McCrea also highlighted the dwindling availability of affordable natural gas for LNG operators, stressing that British Columbia’s natural gas production will need to increase significantly to meet the demands of upcoming LNG projects.
Despite the bullish global demand for LNG, the Canadian federal government remains hesitant. Earlier this year, Resource Minister Jeremy Wilkinson stated that Ottawa was not interested in investing in or financially supporting LNG projects, citing concerns over emissions.
Nevertheless, Canadian energy companies are seizing the opportunity to expand in the LNG market, despite the government’s focus on reducing emissions.