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American private equity firm Carlyle Group Inc. is backing a deal for an oil and gas company in Canada, its second major investment into the country’s oil sector in the last year.
A newly formed company, Avenrock Energy Inc., will acquire privately held Parallax Energy Operating Inc., Carlyle announced Monday in a press release. The deal values Calgary, Alberta-based Parallax at about C$1 billion ($719 million), according to people familiar with the agreement.
The new company will be headquartered in Calgary and will have about 20,000 barrels of energy a day in production, said the people who asked not to be identified because they were not authorized to speak publicly.
It’s the latest activity in the Canadian oil patch this year amid a turnaround in the country’s energy policies to prioritize production and exports, while loosening some environmental restrictions. Canada is hosting global investors at a summit this week in Toronto, aiming to attract C$1 trillion in investment over the next five years, including in major energy infrastructure. Among other projects, the Alberta government and Trans Mountain Corp. are looking for financing for a new million-barrel-a-day pipeline to the country’s Pacific coast. South Bow Corp. is also seeking funding for a 600,000-barrel-a-day pipeline to the US.
Parallax operates in the East Shale Duvernay in Alberta, with production focused on light oil and natural gas liquids, Carlyle said in a statement. It is taking the company over from Houston-based Carnelian Energy Capital Management LP.
Paul Smith, a veteran oil executive and formerly the chief financial officer at Vesta Energy Ltd. before it was acquired by Parallax, was named chief executive officer of Avenrock.
“Carlyle sees significant long-term potential in Western Canada, underpinned by the region’s high-quality, long-duration resource base, improving access to end markets and continued investment across the sector,” the company said in the statement.
Carlyle backed Cygnet Energy’s purchase of Kiwetinohk Energy Corp. last year, helping take the company private in a roughly C$1.4 billion deal. Earlier this year, Parallax sold a 25% stake in its oil-producing properties to US energy firm Northern Oil & Gas Inc.
BMO Capital Markets acted as financial adviser, and Torys LLP acted as legal adviser to Carlyle on the transaction.
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