CNR deal valued at $1.4 billion

Canadian Natural Resources will sell a majority of its royalty assets to PrairieSky Royalty for $1.4 billion to cope with the downturn in oil prices, the two companies announced Monday in a joint statement.

PrairieSky will pay $511 million in cash and will offer 44.4 million of its shares, which will amount to the purchase of 81 percent of Canadian Natural Resources’ total royalty volume.

This deal will allow Canadian Natural Resources to reduce its debt-to-book value from 36 percent to 38 percent. The company will be able to further increase its credit line from about $3.1 billion to about $2.6 billion.

Earlier this month, the company recorded a loss of $82.4 million in its third quarter profit, compared with its profit of $752 million last year during the same period mainly due to a fall in crude prices. Last year, Canadian integrated energy company Cenovus Energy and and producer Encana Corporation also sold their royalties to PrairieSky in a bid to reduce debt and to raise funds for future projects.

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