Vermillion Energy Stock Slides On Acquisition Of Privately Held Westbrick Energy For $750M: Retail Sentiment Hits 1-Year High
By Stocktwits Inc | First Published Dec 23, 2024, 10:21 PM ISTVermilion Energy said the acquisition enhances the depth and quality of its Deep Basin inventory and complements its high-growth, liquids-rich Montney asset. The firm also believes the acquisition will make it the fifth-largest Deep Basin producer.
NYSE-listed shares of Vermilion Energy Inc (VET) declined over 4% on Monday after the company announced its intent to acquire Westbrick Energy, a privately held oil and gas company operating in the Deep Basin, for a total consideration of C$1.075 billion (US$750 million).
Vermilion Energy said the acquisition enhances the depth and quality of its Deep Basin inventory and complements its high-growth, liquids-rich Montney asset. The firm also believes the acquisition will make it the fifth-largest Deep Basin producer.
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The transaction will be funded through the company’s undrawn C$1.35 billion revolving credit facility. The firm has also entered into a new fully underwritten C$250 million term loan maturing in May 2028 through a debt commitment letter with TD Securities Inc.
At the same time, Vermillion Energy has also entered into a new fully underwritten US$300 million bridge facility through a debt commitment letter with Royal Bank of Canada and TD Securities Inc.
The deal is expected to close in the first quarter of 2025. Upon closing, the company estimates to have a net debt of C$2 billion.
CEO Dion Hatcher said the strategic acquisition represents a significant step forward in Vermilion's North American high-grading initiative to increase operational scale and enhance full-cycle margins in the liquids-rich Deep Basin.
"The acquisition adds 50,000 boe/d of stable production and approximately 1.1 million (770,000 net) acres of land from which Vermilion has identified over 700 drilling locations, providing a robust inventory to keep production flat for over 15 years while generating significant free cash flow to enhance the company's long-term return of capital framework,” he said.
Following the announcement, retail sentiment on Stocktwits continued to trend in the ‘extremely bullish’ territory (95/100), hitting a one-year high. The move was accompanied by ‘extremely high’ message volume (77/100).
Retail chatter, however, indicated mixed opinions about the deal.
Meanwhile, shares of the firm lost over 29% since the beginning of the year.
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