Tamarack Valley, Headwater Exploration Agree to $7.25B All-Stock Merger

Canadian oil producers Tamarack Valley and Headwater Exploration have agreed to merge in an all-stock deal valued at C$10 billion ($7.25 billion).

The merger creates the largest publicly traded oil producer focused on Alberta's Clearwater Formation. The combined entity will hold a core land position across Marten Hills, Nipisi and Marten Hills West. Headwater shareholders will receive one Tamarack share for each share held, with Tamarack issuing about 237.8 million shares.

Tamarack shareholders will own 66.5% of the combined company, while Headwater shareholders will own 33.5%.

Tamarack plans to increase its quarterly dividend by 20% to C$0.06 per share. President Steve Buytels said the company's five-year plan now includes Clearwater growth of 10%-12%, up from 8%-10% prior to the transaction. Tamarack Valley's shares rose over 4% following the announcement, while Headwater was up nearly 2%.

Leadership changes take effect January 1, 2027. Buytels will become CEO and join the board of the combined company. Founding CEO Brian Schmidt will become executive chairman.

The transaction is expected to close in the fourth quarter. Tamarack plans to accommodate expected growth in its Clearwater production through existing and planned pipelines to Edmonton, Alberta. These expanded options provide Tamarack with an opportunity to mitigate the risk of local capacity constraints and obtain greater exposure to diversified oil markets.

Non-core assets will be transferred to a new publicly listed firm. Tamarack and Headwater plan to transfer certain non-core exploration assets into Tributary Exploration Inc, to be run by Headwater's current management team with Headwater CEO Jason Jaskela as the top boss. The assets include some Mannville-stack exploratory mineral rights in Alberta, prospective thermal heavy oil opportunities at Handel, Saskatchewan, and legacy McCully natural gas production in New Brunswick. Tributary's common shares will initially be distributed to the shareholders of both Tamarack and Headwater, with Tamarack owning a majority of them.