Arc & Seven Generations Merger Gets Green Light: Here’s What To Expect

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 Arc & Seven Generations Merger Gets Green Light: Here’s What To Expect

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Summary

  • On February 10, both the companies had announced a merger and the deal was valued at C$ 8.1 billion.
  • Both the companies currently deliver the lowest GHG emissions among their Canadian peers.
  • The merged company may now become the largest producer of natural-gas condensate in Canada.

The shareholders of Arc Resources Ltd. (TSX: ARX) has finally approved the much-awaited merger with Seven Generations Energy Ltd. (TSX: VII) on Wednesday, March 31. The merger will make the merged company the sixth-largest Oil and Gas Company in Canada. 

Arc shareholders own more than 95 per cent of the company's stock. Commenting on the merger, Arc chairman Hal Kvisle said that all the Seven Generations employees will join the Arc team.

On February 10, both the companies had announced a merger and the deal was valued at C$ 8.1 billion. The deal required a two-third approval by Seven Generations shareholders and a majority from Arc Resources.

The voting data showed that 99.41 per cent of the shareholders of Seven Generations were in favour of the deal, while from Arc Resources, 96.08 per cent shareholders supported it. 

 

What does this merger mean?

It is expected that the merged company will save C$ 110 million in cost from synergies. It may also become the largest producer of natural-gas condensate in Canada.

The combined production will now be over 340,000 barrels of oil equivalent per day (boe/d), including 138,000 barrels per day of liquids and 1.2 billion cubic feet of natural gas per day.

Since both the companies are conscious about carbon footprint, they currently deliver the lowest greenhouses gases (GHGs) emissions among their other Canadian peers. The merger will elevate its position among prominent Environmental, Social and Governance (ESG)-focused companies and investors.

Source: Pixabay

How do Arc Resources’ financials and stock look?

The scrips were priced at C$ 7.42 at the market close when the merger was announced on February 10. Since then, it has climbed by 4.04 per cent and closed at C$ 7.72 per share on March 31. Notably, the stock went up to C$ 8.50 apiece in mid-March.

The C$2-billion oil and gas company holds a price-to-book ratio of 0.977. It offers a quarterly dividend of C$ 0.06 and has a dividend yield of 3.109 per cent.

Arc Resources’ stock have swelled by 90.6 per cent in the last 12 months.

In 2021, the stock advanced by 28 per cent year-to-date (YTD).

The company achieved a net income of C$ 120.8 million in Q4 2020, against a net loss of C$ 547.2 million in Q4 2019.  

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