Greenfire Resources (TSX:GFR) has entered a definitive agreement to acquire Connacher Oil and Gas for approximately C$1.277 billion ($1.3 billion) in cash consideration.
The acquisition targets Connacher’s 100% operated interest in the Great Divide oil sands project, which is expected to average approximately 19,500 barrels per day of production in 2026.
Great Divide holds proved plus probable reserves of approximately 441 million barrels, equating to a 62-year reserves life index.
Great Divide sits directly adjacent to Greenfire’s Hangingstone assets, enabling more efficient development of the combined asset base.
The company identifies midstream, marketing, operating cost, and general and administrative synergies of approximately C$30 million per year, equivalent to approximately 19% of Connacher’s standalone sustaining free cash flow at US$70 West Texas Intermediate.
Following the acquisition, Greenfire expects 2026 production of approximately 34,000 barrels per day with proved plus probable reserves of 850 million barrels, equating to a reserves life index of approximately 68 years.
The company plans to increase production to approximately 65,000 barrels per day long-term.
Greenfire expects to finance the acquisition through a mix of debt and equity, comprising an approximately C$700 million draw on an underwritten C$1.0 billion reserves-based loan and a C$575 million underwritten bridge facility.
The bridge facility will be repaid with proceeds from an anticipated rights offering of Greenfire common shares post-closing.
Waterous Energy Fund has committed to provide a standby commitment of at least C$575 million for the rights offering.
Upon closing the rights offering and repaying the bridge facility, the company expects leverage of approximately 1.7 times debt to 2027 estimated EBITDA at US$70 West Texas Intermediate.
BMO Capital Markets and National Bank Capital Markets are acting as financial advisors to Greenfire.
Blake, Cassels, and Graydon and Scale are acting as legal advisors. TPH and Co and Norton Rose Fulbright Canada are acting as advisors to Connacher.
Subject to customary closing conditions and regulatory approvals, the transaction is expected to close in August 2026.
Greenfire Resources is a Canadian oil sands producer advancing the Hangingstone and Great Divide assets in Alberta.
Write to JC Villarba at Mining.com.au
Images: Greenfire Resources
