Maybe it is Spring fever or maybe it is a product of an ever-recovering economy, but merger-and-acquisition news is running rampant in the stock market recently. In just a few of the recently announced deals, AT&T announced that it was buying its wireless rival T-Mobile USA from Deutsche Telekom AG for $39 billion in a cash-and-stock deal. Exelon agreed to buy Constellation Energy Group for $7.9 billion two weeks ago, which would make it climb in ranks to the second-biggest residential utility in the U.S.
Johnson & Johnson, still staggering from a flurry of recalls in the last year and a half, agreed to swallow-up orthopedic company Synthes for a cool $21.3 billion, representing its largest purchase ever. Today, also in the biggest acquisition in its history and in an attempt to keep communication technology pace with Google, industry giant Microsoft agreed to purchase Skype for $8.5 billion.
While these may be the household names that hit the headlines of places such as the Wall Street Journal, "'tis the season" for acquisitions on all levels. This morning, Vancouver-based Enterprise Energy Resources Ltd. (TSX-Venture:EER) announced that it has entered into two letter agreements for the acquisition of interests in oil and gas leases in the Williston Basin, Montana.
While this may not sound like an acquisition outright, Enterprise Energy is not merely purchasing rights to the property. Under a letter agreement the Company proposes to acquire from EVO Energy Ltd. all of the shares of Cerda Capital Corporation. Cerda, through a subsidiary, is party to a purchase and sale agreement under which it proposes to acquire from an undisclosed party oil and gas leases over approximately 30,840 net acres in the Williston Basin, Montana.
Under a second letter agreement Enterprise Resources will acquire from Unconventional Energy Partners L.P. all of the shares of Basin Petroleum Ltd. Basin, through a subsidiary, is party to a program agreement with Cisk Ventures Ltd. under which Cisk is assisting Basin in currently leasing lands in the Williston Basin, Montana.
The transactions contemplated under the Cerda Agreement and the Basin Agreement are independent of each other and either may close without the other closing. Each transaction is subject to approval by the TSX Venture Exchange, the completion of the financing and other customary conditions. Both deals with be acquisitions through a combination of cash and shares as well as other stipulations of the contracts.
Drilling activity and, subsequently, oil production in the Williston Basin in Montana has spiked recently as increased industry attention is shifting westward from the North Dakota area where it began. Big-name players such as Vanguard National Resources (NYSE:VNR), Kodiak Oil and Gas (AMEX:KOG) and Northern Oil and Gas (AMEX:NOG) are actively exploring and extracting oil and gas from the prolific area. In fact, Northern Oil reported today that it "has maintained a 100% drilling success rate in the Williston Basin Bakken ... since the company’s inception."
Shareholders are responding favorably to the news of the proposed acquisitions. Enterprise trades on minimal volume as explained through its tiny float of less than five million shares, but volume has gone nearly four-fold its three-month average with nearly 48,000 shares trading hands today.
Heading into the close, the price of a share is trading at a 7.41% premium to yesterday’s close; printing 87 cents after briefly touching 90 cents. Overall, the value of a share of V.EER has nearly tripled in 2011 as the share could have been grabbed for 35 cents at the beginning of January.
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