Hammerhead Resources Inc. And Decarbonization Plus Acquisition Corporation IV Announce C$1.39B Business Combination; Combined Company To Be Listed On Nasdaq
$DCRD
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- Transaction to form a publicly traded upstream oil and gas company with a path toward achieving net zero emissions on a Scope 1 and Scope 2 basis by 2030
- Combined company to advance its differentiated carbon capture and sequestration ("CCS") program in an effort to create value for all stakeholders
- Hammerhead's CCS program is estimated to require approximately C$240 million1 of capital between 2023 and 2029, and, by 2029, is expected to reduce Hammerhead's Scope 1 and Scope 2 emissions by approximately 79% of 2021 levels, even after an anticipated doubling of production volumes
- Combined company's assets to include a large consolidated block of acreage in the prolific Montney trend in Western Canada, spanning over 110,000 net acres in Alberta, the assembly and development of which is the result of over C$1.19 billion of primary equity raised by Hammerhead since its founding in 2009
- Hammerhead's 2P PV10 value was approximately C$2.5 billion based on the reserve evaluator's price deck at December 31, 20212 and C$4.1 billion based on strip pricing at September 9, 2022
- With an identified drilling inventory of over 1,500 locations and an anticipated on-stream count averaging around 30 wells per year, Hammerhead boasts an attractive multi-decade inventory of potential high-return locations in a top-performing onshore basin
- DCRD expects Hammerhead's planned production and EBITDA growth to be in excess of 40% and 50%, respectively, from 2022 projected levels of 31,500-32,500 boe/d and C$375-425 million to an expected 46,000-48,000 boe/d and C$625-675 million in 20243
- The closing of the transaction is not subject to a minimum cash condition; the parties believe that Hammerhead's existing balance sheet with expected leverage, prior to any proceeds from DCRD's cash in trust, of 0.6x LTM EBITDA at year-end 2022, will provide the liquidity necessary to execute on Hammerhead's business plan
- The transaction values Hammerhead at approximately 2.2x DCRD's projected 2024 EBITDA for Hammerhead