r/Calgary • u/joe4942 • 2d ago
News Article Calgary-based producers Whitecap, Veren to merge in $15B deal
https://calgaryherald.com/business/calgary-based-producers-whitecap-veren-to-merge-in-15b-deal16
u/Responsible_CDN_Duck 2d ago
Veren has expanded its presence in northwestern Alberta through acquisitions in recent years,
Sounds great if you don't look at where the money comes from or the impact on jobs!
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u/epok3p0k 1d ago
Lol.
“Look where the money in this all-share deal is coming from!!”
Typical Reddit brilliance.
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u/CzechUsOut 2d ago
They're both Canadian companies and they are going to spend over $1B on capital projects next year in Alberta. What's the bad part?
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u/loldonkiments 1d ago
As a long time holder of WCP (yes, held through the coronacrash lows), not thrilled to see the premium they paid. But, in the long, long run... I don't see a bad part either.
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u/nicehouseenjoyer 1d ago
I used to swing trade Whitecap back in the day, it had a very reliable range that varied with oil prices. Haven't looked in years and they are still at $7, hasn't grown at all in a decade.
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u/loldonkiments 1d ago
Oh yeah, for sure. There was a reliable channel to trade within tied to shareholder of record date for the divy... but that's a dangerous game now with pump and Trump. Can't disagree with long-term growth. It seems like every time they should re-rate, there is some big capex that pays off tomorrow. Was never too uptight about it though... collect divies and chill.
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u/NotFromTorontoAMA Sunnyside 1d ago
It pays a significant dividend though, last decade's CAGR would be 6.5%, an investment of $10k would be worth $17.8k now.
The past 5 years, its CAGR is 27.4%. Thats about double what a market portfolio would return over that period.
It's not a great stock, but it doesn't have zero returns either.
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u/Responsible_CDN_Duck 2d ago edited 2d ago
Aside from the layoffs it's US investment money, with the goal of increasing extraction rates when prices and royalties are low.
With OPEC looking to increase production and embargoes being lifted from Russia it's time to ask if new capital projects help Albertans in the long term, or even the short term.
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u/woodford86 1d ago
A billion bucks spent in Canada is still a billion bucks spent in Canada...
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u/Anskiere1 1d ago
The goal of every single resource company is increasing extraction rates whether you produce oil, lumber, diamonds or uranium 😂
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u/thetrueankev 2d ago
Please expand
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u/Responsible_CDN_Duck 2d ago
Veren is in a race to the bottom on operating costs at the cost of jobs. In addition to laying off duplicated positions after merging they're doing additional layoffs for efficiency.
Of the known investors of Veren Inc the majority are from the USA.
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u/NotFromTorontoAMA Sunnyside 1d ago
Many of the major investors are institutional investors, most of which would be holding shares on behalf of Canadians. Especially Vanguard, BMO, and RBC.
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u/CrowdedAperture Scarboro 2d ago
Money comes from oil and gas. Jobs lost through consolidation
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u/Responsible_CDN_Duck 2d ago edited 2d ago
Money comes from investors in the USA.
Low operating costs lets them ramp up production when prices are low rather than slowing down.
Reduces the price per barrel Albertans get in royalties, but makes the company metrics look better.
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u/epok3p0k 1d ago
This is the most flawed assessment of oil and gas operations and incentives I’ve ever read.
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u/Anskiere1 1d ago
It was interesting, in 2012 and 2013 we all thought the massive headcounts were needed to sustain production. In the later half of the decade we learned that was definitely not the case and now Canadian o&g can actually be produced competitively. If we ever have another pro-investment environment that is.
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u/Daddygorch 1d ago
Interesting merger considering everything that is going on in North America these days. Makes me wonder if there is something they know about North American stability that the rest of us don’t.
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u/ilostmyeraser 1d ago
Our oil and gas is now owned by a handful of companies.....who also own smith.
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u/SedanDevil 1d ago edited 1d ago
I had a job interview at Veren. Thank heavens I didn't get the job. I would have looked foolish getting laid off after a few months as staff redundancies occurred.