Canada’s Topaz Energy Raises C$230mn in IPO
Canada’s Topaz Energy, created by Tourmaline Oil in 2019 as a private royalty and energy infrastructure company, said October 26 it had raised C$230.5mn (US$174.4mn) from an initial public offering (IPO) from treasury and a secondary offering.
A total of 17.732mn shares priced at C$13 each were issued in aggregate from the offering, raising C$217.5mn from the IPO and C$13mn from the secondary offering. Additionally, the initial offering’s syndicate of underwriters was granted an over-allotment option, exercisable for 30 days, to purchase an additional 2.51mn shares at the offering price.
Upon closing of the offering, Tourmaline Oil – Canada’s largest natural gas producer – will hold 52.9% of the common shares of Topaz, an interest that could be reduced to 51.7% if the over-allotment is exercised in full.
Topaz holds gross overriding royalty (GORR) interests on about 2.2mn acres of Tourmaline-operated lands in Alberta’s Deep Basin and Peace River High and in the Montney fairway of British Columbia. The GORR is set at 4% on natural gas through 2021, declining thereafter to 3%, and at 2.5% on crude oil and condensate.
In 2019, pro-forma production from the lands was about 10,110 barrels of oil equivalent/day net to Topaz, comprised 93% of natural gas.
Topaz also has overriding royalty rights on 77,000 net acres of third-party lands in the Clearwater crude oil area of northeastern Alberta. The GORR on those lands is 4%.
And it has ownership interests in four Tourmaline-operated gas plants, with fixed processing revenue from 125mn ft3/day of capacity and working interest revenue from another 48mn ft3/day of capacity.
Topaz generated pro-forma revenue in 2019 of about C$108mn, with 49% from royalty production, 39% from processing revenue and 12% from other sources, according to the company’s most recent corporate presentation. Pre-tax earnings (Ebitda) were estimated at C$97.3mn.