Shareholders of Calgary-based Pipestone are set to vote on a proposal which would see privately-held Strathcona Resources buy them out in an all-stock deal, creating a combined company with an initial market capitalization of $8.6 billion.
The combined company would be the fifth largest oil producer in Canada, according to a Pipestone news release, with current production of approximately 185,000 barrels of oil equivalent per day across the Cold Lake, Lloydminster and Montney oil-producing regions. Strathcona Resources is owned by Calgary-based private equity firm Waterous Energy Fund. Through a series of recent acquisitions, the company has grown its production from 152 barrels of oil equivalent per day to more than 35,000 boe/d in just four years.
But Atlanta, Georgia-based GMT Capital Corp., which controls about 19 per cent of Pipestone's shares, opposes the deal. GMT has issued a dissident proxy circular urging other shareholders to vote against Strathcona's offer, arguing it significantly undervalues Pipestone's shares.