AKITA Drilling (AKT-A.TO, AKT-B.TO) entered into a definitive agreement with Paramount Resources (POU.TO) to acquire all of Paramount's interests in Fox Drilling Limited Partnership, a privately-held drilling contractor that operates a fleet of high-specification AC triple drilling rigs in the Western Canadian Sedimentary Basin, said AKITA on Monday.
AKITA will also undertake a reorganization of its share capital in connection with the acquisition, which will result in the elimination of AKITA's dual class share structure, said the company.
AKITA will acquire all of Paramount's interests in Fox and its general partner, Fox Drilling Inc, in consideration for the issuance of around 19.26 million common shares, said the company and added that the final purchase price for the acquisition will be subject to post-closing adjustments for cash, working capital, indebtedness and any transaction expenses of Fox.
"We believe this transaction will create a stronger, more resilient drilling company with long-term value for all shareowners," said Colin A. Dease, President and Chief Executive Officer of AKITA. "The addition of Fox's fleet of high-specification AC triple rigs will enhance our scale and capabilities in the Montney and Duvernay gas basins."
Under the purchase agreement, Paramount agreed to distribute the common shares pro rata among its shareholders promptly following the closing of the acquisition, said the company.
Following the completion of the transaction and the distribution by Paramount, Paramount shareholders are expected to collectively hold approximately 33% of AKITA's outstanding common shares, noted AKITA.
Paramount will enter into an agreement with AKITA for a term of three years, concurrent with the closing of the acquisition, pursuant to which Paramount will commit to utilize rigs of AKITA for an aggregate total of 2,700 rig days during the term, said the company.
Upon closing of the transaction, James Riddell, the president and chief executive officer and chairman of the board of directors of Paramount and Jackson Riddell, vice-president of Lionsgate Capital Ltd., are expected to join the board of directors of AKITA and three of the current AKITA directors are expected to step down, stated the company.
Linda Southern-Heathcott and Nancy Southern will remain as directors, with Southern-Heathcott remaining as board chair, said the company and added that the management team of AKITA will remain the same following closing of the transaction.
AKITA plans to proceed with its annual general meeting scheduled for May 12, 2026, it said.
In addition to shareholder approval, the transaction, which involves the share reorganization and the acquisition, is subject to customary conditions, including the conditional approval of the TSX for the listing of the common shares issuable pursuant to the transaction.
"AKITA plans to call a special meeting of AKITA shareholders to approve the Share Reorganization to be held in June 2026 and expects that the Transaction will be completed shortly after the receipt of such approval," added the company.