PKN Orlen SA, Poland’s biggest oil company, agreed to buy Birchill Exploration Ltd to double its crude production in Canada.
Orlen, which in September bought Canada’s TriOil Resources Ltd for C$183.7 million ($169 million) in its first foreign expansion into oil production, plans to complete the transaction by the end of June, the state-controlled company said in a regulatory statement today. Orlen, based in Plock, Poland, didn’t disclose the purchase price.
The Polish company, whose foreign operations also include refining and retail businesses in the Czech Republic and Lithuania, is boosting crude oil production to cut its reliance on Russian supplies. Orlen, which is also looking for oil and gas from shale deposits in Poland, plans to spend 2.7 billion zloty ($897 million) on global acquisitions by 2017, it said in a separate statement today. Total spending on exploration and production may amount to 5.1 billion zloty.
Before the TriOil acquisition Orlen generated almost its entire revenue and profit from oil refining and petrochemical businesses as well as retail fuel sales in central Europe. In the first quarter of 2014 the company posted its first profit from oil production as its earnings before interest, taxes, depreciation and amortization stood at 31 million zloty.
TriOil produced the equivalent of 3,700 barrels of oil a day and its total deposits were the equivalent of 22 million barrels, Orlen said today.
Birchill, whose wells are located next to TriOil’s fields in Alberta, has proved and probable reserves of 26.6 million of barrels of oil equivalent, while its productive capability is more than 4,000 barrels a day, according to a February report by First Energy Capital, a Calgary-based research company. First Energy was picked by Birchill as a financial adviser to examine strategic alternatives, according to the report.