Hammerhead plans rare U.S. listing of Canadian gas producer in over $1 bln SPAC deal

Hammerhead Energy

26/09/2022 16:01

Sept 26 (Reuters) - Hammerhead Resources Inc plans to
list on the Nasdaq by merging with blank check company
Decarbonization Plus Acquisition Corporation IV  DCRD.O  in a
C$1.39 billion ($1.02 billion) deal, a rare U.S.-listing for a
Canadian oil and gas producer. 
    The listing for Hammerhead, focused on the Montney shale
formation in Alberta, would be a litmus test for investor
confidence in the Canadian oil and gas production business, as
for years foreign private equity players and oil majors have
been exiting the oil patch due to a myriad of issues.
    The merger also comes at a time when the frenzy around
listings through the SPAC route have wound down after nearly two
years of immense popularity. A SPAC typically raises money
through an initial public offering, then looks for a company to
buy.
    Special purpose acquisition company Decarbonization raised
$275 million in August last year and said it was looking for a
target focused on developing a platform that decarbonizes the
most carbon-intensive sectors, including energy, agriculture,
industrials and transportation. 
    The deal with Hammerhead, backed by private equity firm
Riverstone Holdings, is expected to close in the first quarter
next year and generate gross proceeds of about $320 million,
assuming minimal redemptions. 
    Hammerhead intends to use the funds to accelerate its carbon
capture and sequestration (CCS) program and deliver substantial
production and cash flow growth over the next several years. 
    Its decarbonization investment campaign across its asset
base is estimated to require $240 million of capital between
2023 and 2029.
    The combined company, to be listed on Nasdaq and trade under
"HHRS", will be managed by Hammerhead's current executive team
led by Chief Executive Officer Scott Sobie.
    CIBC Capital Markets and Peters & Co. Limited are acting as
financial and capital markets advisers to Hammerhead.
($1 = 1.3652 Canadian dollars)
 (Reporting by Mehnaz Yasmin in Bengaluru; Editing by Shinjini
Ganguli)
 ((Mehnaz.Yasmin@thomsonreuters.com;))