What might be next for Penn West Energy Trust, after its takeover deal for Canetic Resources Trust is completed? A sizable U.S. acquisition could well be in the cards.
"If you're going to see one move, and a strong move, it would be to extend our reach beyond the Western Canadian Sedimentary Basin," Penn West president and chief executive Bill Andrew told investors and analysts in a conference call Wednesday morning to discuss the Canetic deal.
Mr. Andrew acknowledged that Canetic's modest presence in the United States - it owns coalbed methane assets in Wyoming - "gives us an entry point" to expand into the U.S. market.
Canetic president and CEO Paul Charron, who will remain with the post-takeover Penn West as president (Mr. Andrew will remain CEO), said his company had already been sniffing around some attractive takeover possiblities south of the border, but had decided the price tag for what they wanted - in the $3-billion range, roughly matching Canetic's market capitalization - was just too big. But given Penn West's heft after the Canetic deal - about $11-billion in market cap, roughly $15-billion enterprise value - "Those transactions are way more doable," he said.
Mr. Charron also noted that due to the combined company's size, its corporate debt will be investment-grade, meaning it will have better access to financing to fund future growth.
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