The Calgary-based company doubled its portfolio in Texas with a US$2.5-billion acquisition financed through three bank loans
expanded its holdings in Texas on Tuesday with a US$2.5-billion acquisition financed with loans from three Canadian banks.
The deal will cost Baytex US$1.85-billion, with 70 per cent of the purchase price paid in stock and the remainder in cash. The Calgary-company will also take on US$650-million of Ranger’s debt, which it plans to replace with new loans at lower interest rates. In fiscal 2022, the five largest Canadian banks lent a total of $103.2-billion to oil and gas companies, while the previous year, they lent $137-billion to the sector. Bank executives have consistently said they will provide the capital needed to help energy companies invest in the transition to a low-carbon economy.
After the takeover closes, Baytex will begin paying a common share dividend of 9 cents per share. The company is earmarking 50 per cent of its cash flow for dividends and share buybacks, and plans to pay down loans quickly, with a debt target of US$1.5-billion. When it achieves this debt level, Baytex said it will begin returning 75 per cent of its cash flow to shareholders.
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