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Veren Inc. (NYSE:VRN) shares are trading higher on Monday after the company inked a merger deal with Whitecap Resources Inc. for an all-share transaction valued at around C$15 billion ($10.4 billion), including net debt.
As per the terms of the deal, Veren shareholders will receive 1.05 common shares of Whitecap for each Veren common share held.
After the transaction closes, Whitecap shareholders will hold approximately 48%, and Veren shareholders will hold about 52% of the total common shares outstanding in the combined company.
The transaction is anticipated to close by May 30, 2025. The combined company will have a corporate production of 370,000 boe/d (63% liquids), with substantial overlap in both unconventional and conventional assets.
The combined company is expected to become the largest Canadian light oil-focused producer and the seventh-largest producer in the Western Canadian Sedimentary Basin, with significant potential for natural gas growth.
The newly formed company will become the largest landholder in both the Alberta Montney and Duvernay, as well as a prominent light oil producer in Saskatchewan.
Also, the combined company will be the largest producer in the high-margin Kaybob Duvernay and Alberta Montney, with around 220,000 boe/d of unconventional production.
It will also be the largest landholder in the Alberta Montney and the second-largest across the Montney and Duvernay fairways, owning 1.5 million acres.
With over 4,800 development locations, the company is positioned for decades of future production growth.
The combined company will also be the second-largest producer in Saskatchewan, with assets in the west and southeast.
The company expects to realize annual synergies of over C$200 million, regardless of commodity prices, starting immediately after the transaction closes.
The combination is immediately accretive to Whitecap’s standalone funds flow per share (10%) and free funds flow per share (26%), excluding any synergies, demonstrating improved sustainability and a stronger financial outlook for the combined shareholders.
The combined company will maintain Whitecap’s annual dividend, offering Veren shareholders a 67% increase in their base dividend. The company will provide detailed 2025 guidance upon transaction completion.
Price Action: VRN shares are up 14.4% at $5.615 at the last check Monday.
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