CALGARY — Shares in NuVista Energy Ltd. jumped by as much as 18.7 per cent to 76 cents after Calgary rival Paramount Resources Ltd. revealed it has accumulated a 17.6 per cent equity stake and may make a takeover bid.
In a news release, Paramount says it made a block trade through the Toronto Stock Exchange to buy 17.3 million shares of NuVista — about 7.7 per cent — for 61 cents each or a total of $10.6 million. It revealed it already owned 22.4 million shares, representing 9.94 per cent of the outstanding total.
Paramount shares dropped by as much as seven cents or 3.5 per cent to $2.01 in early trading.
Paramount says it decided to increase its investment in NuVista because of the attractive share price, adding it may in future “make public or private proposals” to NuVista or its shareholders to buy more shares or all of the shares or complete a corporate takeover.
NuVista shares have traded between 24 cents and $3.36 and Paramount between 81 cents and $7.90 in the past 52 weeks as oil prices rise and fall thanks to events including a global price war and the COVID-19 pandemic.
In a report, ATB Capital Markets analyst Patrick O’Rourke says both companies “stand well” on their own but a combination would also be attractive to investors given their complementary asset bases.
In the second quarter, NuVista reported producing 50,900 barrels of oil equivalent per day while Paramount’s output was 68,800 boe/d.
This report by The Canadian Press was first published Oct. 1, 2020.
Companies in this story: (TSX:POU, TSX:NVA)
The Canadian Press