(WO) — Tamarack Valley Energy and Headwater Exploration have agreed to merge in an all-stock transaction valued at approximately US$7.2 billion (C$10 billion), creating the largest publicly traded pure-play producer in Alberta’s Clearwater oil play.
Under the agreement, Headwater shareholders will receive one Tamarack common share for each Headwater share held. Tamarack will issue approximately 237.8 million shares, leaving existing Tamarack shareholders with 66.5% of the combined company and Headwater shareholders with 33.5%.
The combined producer is expected to have more than 80,000 boed of run-rate production, over 300 MMboe of proved and probable reserves and more than 3,000 identified drilling locations. Its land position will span more than 1,500 sections across the greater Clearwater fairway, including core positions at Marten Hills, Nipisi and Marten Hills West.
The companies expect more than C$50 million in annual run-rate synergies, with operational and development programs beginning to be consolidated in 2027. The combined company’s free funds flow breakeven is projected at US$37/bbl.
Tamarack also expects to expand its oil transportation capacity following the merger. The company has secured 25,000 bpd of Trans Mountain capacity to Canada’s West Coast beginning in first-quarter 2027 and 10,000 bpd of potential capacity on the proposed South Bow Prairie Connector, which would provide access to Cushing and the U.S. Gulf Coast.
As part of the transaction, certain non-core exploration assets will be transferred into a new publicly listed company, Tributary Exploration. The portfolio will include Mannville exploration acreage in Alberta, thermal heavy-oil opportunities in Saskatchewan and the McCully natural gas asset in New Brunswick.
The merger is expected to close midway through fourth-quarter 2026, subject to shareholder, court and regulatory approvals. Tamarack’s Steve Buytels is expected to become president and CEO of the combined company effective Jan. 1, 2027, while current CEO Brian Schmidt will transition to executive chairman.
Top image: Tamarack Valley
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