Heritage Royalty sells Western Canadian royalty assets to PrairieSky for $728 million

On December 17, 2021, Heritage Royalty completed its $728-million sale of 1.9 million acres of royalty lands in Alberta, Saskatchewan and Manitoba to PrairieSky Royalty, including 1.7 million net acres of fee simple mineral title lands.

The transaction increases PrairieSky’s significant oil and natural gas royalty acreage position by adding over 1.9 million acres of royalty interest lands, providing PrairieSky with a vast undeveloped land position for future leasing and royalty generating opportunities and the perpetual optionality that exists only with fee simple mineral title. The transaction also adds 2,700 BOE per day of current royalty production volumes which are expected to generate approximately $65 million of royalty production revenue.

The transaction also results in a significant return on investment for Heritage which it anticipates redeploying to incentivize development on its highly prospective inventory of undeveloped lands.

The transaction was funded through a new $500 million term loan provided by TD Securities Inc., and a concurrent $200 million bought deal equity financing led by TD Securities Inc. and RBC Capital Markets as joint bookrunners and co-led by CIBC Capital Markets and BMO Capital Markets on behalf of a syndicate of underwriters.

Bennett Jones LLP acted for Heritage Royalty with a team led by Vivek Warrier and included Megan Ollivier, Julia Pasieka (Corporate + Oil &Gas), Beth Riley (Competition) and Greg Johnson (Tax).

Blake, Cassels & Graydon LLP acted as counsel for PraireSky with a team led by Christine Milliken and included Stephanie Symonds-D'Arcey.

McCarthy Tétrault advised PrairieSky in respect of Competition Act matters with a team led by Jason Gudofsky that included Alyson Goldman (Business), Michael Caldecott and Gideon Kwinter (Competition).