NCE Petrofund bids $266 million for Magin Energy

In what is seemingly becoming a daily occurrence, another merger is in the works in the Canadian oilpatch.

NCE Petrofund Corp. revealed Friday it will buy Magin Energy Inc. for $266 million in cash, shares and assumed debt.

"This transaction benefits both Petrofund unitholders and Magin shareholders" said John Driscoll, president of Petrofund. "The Magin properties are diverse in nature and will provide the trust with continued strong cash flow performance," Driscoll added.

He said Magin shareholders are receiving excellent value for their assets and will have the opportunity to benefit from the development of these assets by Petrofund.

The boards of both Petrofund and Magin have approved the deal, which is still subject to due diligence. Magin has agreed to a $10-million break-up fee if the deal fails.

Magin's shareholders can choose between 0.896 of a unit of Petrofund or $5.86 cash for each of their shares. There is a cap of $58.7 million cash and 26.087 million Petrofund units available.

Petrofund will also pick up Magin's debt, working capital deficiency and capital lease obligations of $34.5 million. Petrofund is an income trust that acquires oil and gas properties.

Also on Friday, U.S.-owned EOG Resources Canada Inc. bid for Derrick Resources Inc., a junior energy company, in a cash deal valued at about $53 million.

The Canadian oil and gas sector has been bubbling over with mergers and takeovers lately, thanks in part to full coffers from high energy prices.

On the list of buyers and sellers so far this year, Baytex Energy offered $159 million for Triumph Energy and $72 million for OGY Petroleums. Anadarko Petroleum beat out Hunt Oil for Berkley Petroleum with a $1.68 billion bid.