Mining & Metals
Highwood Asset Management Selling Its Wilson Creek Assets to Obsidian Energy For Up to $112 Million; OBE Up 2.25% In US Premarket
Highwood Asset Management (HAM.V) overnight Tuesday said it had entered into a definitive asset purchase and sale agreement to sell its Wilson Creek assets to Obsidian Energy (OBE.TO, OBE) for up to $112 million.Shares in OBE were at last look up 2.25% in US premarket trade as the company in a statement said the transaction consolidates its position as the largest Belly River producer and deepens its core light oil development platform. The transaction is immediately accretive to funds flow from operations and strengthens the company's multi-year Willesden Green growth program, it added.Under the terms of the agreement, Obsidian Energy will acquire the assets for cash consideration of $105 million payable upon close, subject to closing adjustments, plus contingent consideration in quarterly instalments between the third quarter of 2026 and the second quarter of 2027 up to an aggregate of $7 million, based on the price of WTI, a statement from HAM said. The transaction has an effective date of April 1, 2026 and is expected to close on or about June 30, 2026, subject to customary closing conditions and regulatory approvals, it addedHighwood expects to use a portion of the upfront consideration to reduce its outstanding debt, improving Highwood's balance sheet and overall liquidity, it said. The transaction creates optionality for capital acceleration, returns of capital to shareholders, and acquisitions, it added.Among transaction highlights, HAM said it crystallizes a pre-tax return on invested capital of more than 200% for the Wilson Creek assets since they were acquired in August 2023. The assets were acquired for net consideration of approximately $35 million and have generated approximately $26 million in Asset Level Free Cash Flow up to March 31, 2026.HAM said it "significantly" reduces its leverage. Net proceeds from the divestiture will be used to reduce Highwood's net debt, which is anticipated to be approximately $15.0 million after closing of the transaction. "The strength of Highwood's balance sheet post-closing is expected to provide Highwood with the flexibility to enhance shareholder total returns through accelerated growth in Brazeau, further development of early-stage opportunities in Highwood's portfolio, strategic acquisitions, and/or returns of capital," it added.Shares in HAM were down $0.15 or 3% to $4.90 in Canada yesterday. Obsidian was up 6.4% or $1.03 at $17.03 in Canada on Tuesday.
$HAM.V$OBE.TO