Veren Inc. VRN and Whitecap Resources Inc. have announced a transformative C$15 billion merger, creating Canada’s leading light oil and condensate producer with significant assets in Alberta’s Montney and Duvernay formations. The combined entity will hold the largest land position in Alberta Montney and Duvernay and rank as the seventh-largest producer in the Western Canadian Sedimentary Basin.
The deal will require the necessary approval of the shareholders of both companies and will also need court and regulatory approvals before closing.The transaction, expected to close by May 30, 2025, promises enhanced shareholder value, operational synergies and a strengthened balance sheet.
Details of the Agreement
The agreement states that the C$15 billion transaction is inclusive of net debt and for each Veren common share held, the Veren shareholders will receive 1.05 common shares of Whitecap. At the close of the transaction, Whitecap shareholders will own about 48% and Veren shareholders will own about 52% of the combined common shares outstanding.
The company will continue under the Whitecap name, with the Whitecap management leading the combined company and four Veren directors joining the Whitecap board. The board of the combined company will consist of eleven members: seven directors from Whitecap and four from Veren. The combined management team will lead to the formation of an experienced board of directors that will prioritize sustainable and profitable growth to generate strong returns for the shareholders.
Scale and Efficiency Benefits of the Deal
The merger brings together complementary asset bases, increasing production capacity to 370,000 barrels of oil equivalent per day (boe/d), with 63% liquids. The company will also hold over 4,800 Montney and Duvernay development locations, securing decades of future production. In Saskatchewan, the combined entity will become the second-largest light oil producer, with 40% of conventional production under waterflood recovery, which has a low decline rate, ensuring long-term stability. The Saskatchewan assets have about 7,000 development locations that will help generate meaningful free funds flow in the future.
Additionally, the deal is expected to deliver immediate financial accretion, boosting funds flow per share by 10% and free funds flow per share by 26%. With anticipated annual synergies exceeding C$200 million, the combined company will have a strong financial outlook, reinforcing its position in public markets.
Financial Benefits and Competitive Edge
The merger will expand the company’s shareholder base and achieve a greater market following. The combined company will continue to pay Whitecap's annual dividend of 73 Canadian cents per share, which represents a 67% increase in the base dividend for Veren shareholders.
With an investment-grade credit rating and an exceptional balance sheet, the merged company will benefit from an improved credit profile and reduced cost of debt. A C$3.5 billion combined credit facility, secured through major Canadian banks, will further support the integration and expansion efforts.
VRN’s Zacks Rank and Key Picks
Calgary, Canada-based Veren explores, develops and produces oil and gas properties principally in Canada and the United States. Currently, VRN has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some top-ranked stocks like Delek Logistics Partners, LP DKL, Archrock, Inc. AROCand Coterra Energy Inc. CTRA. While Delek Logistics and Archrock currently sport a Zacks Rank #1 (Strong Buy) each, Coterra Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Delek Logistics Partners owns, operates, acquires and constructs crude oil and refined products logistics and marketing assets. The Zacks Consensus Estimate for DKL’s 2025 earnings indicates 34.45% year-over-year growth.
Houston-based Archrock is a provider of natural gas contract compression services as well as a supplier of aftermarket services for compression equipment. The Zacks Consensus Estimate for AROC’s 2025 earnings indicates 46.67% year-over-year growth.
Houston, TX-based Coterra Energy is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. The Zacks Consensus Estimate for CTRA’s 2025 earnings indicates 97.62% year-over-year growth.
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Veren Inc. (VRN) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
