A royalty counterparty just became a major shareholder
Topaz Energy Corp. (TSX: TPZ) was the consideration currency in a September 8 closing transaction between Rubellite Energy Corp. and the operator of the East Edson natural gas assets in west-central Alberta. Rubellite sold its 50 percent non-operated working interest for $67.0 million, satisfied through delivery of 2.083 million freely tradeable Topaz common shares.
The shares were valued at the 10-day volume weighted average Topaz price ending three business days before close: $32.1588 per share. Rubellite retained net operating income from East Edson through August 31 and will receive Topaz's September quarterly dividend of $0.35 per share, approximately $0.73 million, on the shares received.
East Edson produced about 3,700 boe per day, roughly 89 percent gas, from the Wilrich formation. Rubellite said the sale transitions it back to a pure-play heavy oil model with oil weighting above 90 percent and operatorship above 98 percent of production.
For Topaz, the transaction is indirect exposure through a large block holder rather than a direct asset acquisition. Topaz reported second-quarter royalty volumes of 24,233 boe per day on July 27 and paid a $0.35 quarterly dividend at a 61 percent payout ratio.
Neutral read
TPZ is on the listed royalty and midstream list. Banks were skipped. 2.083 million shares and $67 million of deemed value are the facts. Write this as a third-party disposition using Topaz paper, not as a Topaz-operated asset buy. Watch whether Rubellite holds or sells the block and what that does to Topaz's float.