Whitecap to buy some oil and gas assets from Imperial Oil, raising dividend

CALGARY - Imperial Oil Ltd. (TSX:IMO) has agreed to sell some of its producing oil and gas assets in Western Canada for $855 million to Whitecap Resources Inc. (TSX:WCP).

Calgary-based Whitecap says its annual production will grow to the equivalent of 33,500 barrels per day of oil and gas after the acquistion, allowing it to increase its monthly dividend by 10 per cent.

"Since converting to a dividend-growth strategy in January 2013, our objective has been to maximize total shareholder return through a combination of sustainable dividends and per share growth in cash flow, production and reserves, Whitecap said Monday.

The company's new guidance for 2014, is 31,600 oil-equivalent barrels per day, a 13 per cent increase from the previous target of 27,900. Cash flow net back netback is estimated at $42.70 per barrel, up seven per cent from the previous guidance of $40 per boe.

Cash flow for the full year is expected to rise to $492.5 million, up 21 per cent from the previous guidance of $407.3 million, while cash flow per share, after taking into account additional shares, will rise by seven per cent to $2.13 per share from $1.99.

Whitecap says its monthly dividend will rise to 6.25 per share, or 75 cents per year, from 5.67 cents per month or 68 cents per year. It expects the first dividend to be at the higher rate will be paid in June.

In two other deals announced Monday, Whitecap paying $107 million to a private company for assets in north central Alberta and and it will sell gas processing equipment and reserves in the Nisku area to Keyera Corp. (TSX:KEY) for $113 million.

Keyera said Whitecap was acquiring the assets "as part of a larger transaction" without naming the third party.

Whitecap said it will use proceeds from its side deal with Keyera to help pay for the purchase and has arranged to sell $500 million of equity and debt securities to fund the rest.

The deals are expected to close in May.

Imperial says the lands in Alberta and British Columbia that it's selling to Whitecap produced the equivalent of 15,000 barrels per day last year, split evenly between oil and gas.

Whitecap produced about 19,769 barrels per day in 2013 and had expected to increase its output this year to increase its output this year with a prior acquisition in Saskatchewan completed in January.