Riverstone Energy shares experienced a significant increase after the announcement that its portfolio company, Hammerhead Energy Inc., will be sold to Crescent Point Energy Corp. The sale comes at an enterprise value of 2.55 billion Canadian dollars ($1.86 billion).
Rise in Share Value
At 0856 GMT, shares rose by 77.0 pence or 12% to 718.0 pence.
Transaction Details
According to the energy investment company, each Hammerhead share will be exchanged for around CAD15.50 in cash and CAD5.50 in Crescent Point common shares. The sale is projected to close in December. Hammerhead shares were valued at 14.63 U.S. dollars at the close of trading on Monday.
Riverstone’s Stake and Proceeds
Riverstone currently holds approximately a 17% stake in Hammerhead. As a result of the sale, Riverstone will receive a total of US$198 million in realized cash, which includes US$23 million from prior distributions, as well as US$62 million from eight million Crescent Point shares.
Conclusion of Negotiations
This sale represents the conclusion of extensive discussions and negotiations between Riverstone and several potential acquirers of Hammerhead.
Plans for Excess Capital
Upon the completion of the sale, it is expected that approximately 43% of Riverstone’s net asset value will consist of cash. The company has stated that it is actively exploring efficient ways to return excess capital to its shareholders.
