Daylight acquires West Energy

Calgary-based Daylight Resources has announced it is buying West Energy for $570 million.  Daylight, a junior oil trust, said it wants to expand its holdings in the Pembina Cardium oil region of central Alberta. It said its intentions towards Calgary-based West intensified following WestÔÇÖs acquisition of assets formerly owned by Talisman Energy in January. About 90 per cent of West's assets lie in the Pembina oil field, where it has 10,360 hectares of oil rights. Pembina is located in the Cardium Formation, which was discovered in the 1950s. Since this time, new technology has enabled increasing quantities of oil to be recovered from the basin. New horizontal drilling and fracturing techniques have recently made the region a target for increasing numbers of producers and explorers. Last week, PetroBakken Energy announced its third Cardium acquisition in two months for a total investment of more than $1 billion. Daylight has said it plans to spend over $150 million on horizontal wells this year in the Cardium play. Commenting on the deal, Anthony Lambert, president and CEO of Daylight said: ÔÇ£With the addition of WestÔÇÖs high quality assets, this transaction solidifies DaylightÔÇÖs position as one of the leading players in the Pembina Cardium horizontal oil development.ÔÇØ Ken McCagherty, president and CEO of West stated: ÔÇ£Our combination with Daylight enables WestÔÇÖs shareholders to take advantage of substantial synergies in the combined Pembina area and to benefit from DaylightÔÇÖs extensive inventory of high quality oil and gas resource play opportunities in other areas of the Western Canadian Sedimentary Basin." The total value of deals in the Cardium region is estimated to increase by 25 per cent in 2010. Takeovers and asset sales added up to $20 billion last year, with activity this year predicted to total about $25 billion. The acquisition will raise Daylight's total oil output from around 40 per cent of production to 45 per cent. West Energy produces the equivalent of 5,800 barrels of oil a day, of which 81 per cent is oil and natural gas liquids. The deal is Daylight's sixth acquisition in two years and biggest to date, as the company shifts to an exploration and production model ahead of federal tax changes for the trust sector. Daylight said the West deal is expected to close by May. Last August, the company acquired Highpine Oil and Gas for $530 million.