Franco-Nevada Corp. announced November 6 it is buying a $400-million stake in a Saskatchewan oilfield as it also announced a dividend increase and third-quarter earnings that beat analystsí expectations.
The mining financier said it has a deal with Penn West Petroleum Ltd. to acquire an approximate 11.7 per cent net royalty interest in the Weyburn Oil Unit for $400-million in cash.
The Weyburn Oil Unit is a conventional unitized oilfield in southeast Saskatchewan, operated by Cenovus Energy Inc.
Current production levels are about 26,000 barrels of oil per day with a reserve life index based on proven and probable reserves of more than 20 years.
The acquisition adds to Franco-Nevada's existing interests in the project, which include a 0.44 per cent overriding royalty and a 2.26 per cent working interest.
The deal is expected to close around November 30 and will be funded through Franco-Nevada's existing working capital.
The company said the acquisition will further diversify its royalty and stream portfolio and adds known and proven cash-flowing assets in a safe jurisdiction.