(Reuters) - Canadian Natural Resources Ltd (TO:CNQ) said on Monday it will buy smaller rival Painted Pony Energy Ltd (TO:PONY) for about C$461 million ($344.26 million) including debt, as Canada's biggest oil and gas producer seeks to expand its Western Canada acreage.
Natural gas prices have come under pressure from reduced consumption as efforts to tackle the COVID-19 pandemic resulted in a drop in manufacturing activities, while cancelled LNG exports have led to high natural gas inventories.
"This transaction also allows us to further insulate against natural gas costs in our oils sands operations and has minimal impact on the company's low overall corporate decline rate," said Canadian Natural President Tim McKay in a statement.
Canadian Natural said the deal includes Painted Pony's properties in Northeast British Columbia areas of Blair, Daiber, Kobes and Townsend, which together produce about 270 million cubic feet per day of natural gas and 4,600 barrels per day of natural gas liquids (NGLs).
According to the terms, Canadian Natural Resources will acquire Painted Pony's outstanding shares for C$0.69 per share in cash, a premium of 17% to Friday's closing price on the Toronto Stock Exchange.
Canadian Natural will also take on about C$350 million of Painted Pony's debt. The companies expect to close the deal in the second half of the year.
The slump in oil and gas prices has also sent energy stocks to record lows, providing larger companies with a chance to increase their holdings by buying smaller rivals for cheap.
Last month, U.S. oil major ConocoPhillips (N:COP) agreed to buy land from Kelt Exploration Ltd in Canada's Montney shale oil play for $375 million, expanding its existing position in the region at an attractive price.
($1 = 1.3391 Canadian dollars)