Tamarack Valley Energy Ltd. and Headwater Exploration Inc. said Tuesday they have agreed to combine in an all-stock transaction valued at about $10 billion, a deal that would create the largest publicly traded oil producer focused on Alberta’s Clearwater play.
Under the agreement announced Sept. 8, Headwater shareholders will receive one Tamarack share for each share they hold, with Tamarack issuing roughly 237.8 million shares, the companies said in a joint news release. Tamarack shareholders would own 66.5 per cent of the combined company and Headwater shareholders would own 33.5 per cent. The transaction is expected to close in the fourth quarter.
Reuters, in a report carried by BNN Bloomberg, put the value of the deal at $10 billion, or roughly US$7.25 billion. The Globe and Mail and the industry publication BOE Report also reported the terms on Tuesday.
The merged company would hold more than 1,500 sections across the Clearwater fairway, with more than 300 million barrels of oil equivalent in proved and probable reserves and more than 3,000 identified drilling locations, according to the companies. On a pro forma basis, Tamarack said full-year 2026 corporate production would average 65,500 to 67,500 barrels of oil equivalent per day, an increase of about seven per cent, and that run-rate production of the combined company would exceed 80,000 barrels of oil equivalent per day.
Tamarack also said it intends to raise its quarterly dividend to six cents a share from five cents.
The Clearwater is a heavy oil play in north-central Alberta that has drawn steady drilling activity in recent years because its wells are comparatively inexpensive to drill and can be brought on production quickly. Both companies have built their businesses around it, and the combination consolidates two of its most active operators into a single producer rather than adding a new entrant to the play.
Steve Buytels, who has served as Tamarack’s president since July 2025, is to become president and chief executive officer of the combined company, according to the announcement. Brian Schmidt, Tamarack’s founding chief executive since August 2009, would move to the role of executive chairman of the board.
The companies also plan to spin out a separate, publicly listed exploration company called Tributary Exploration, which would take on assets considered non-core to the merged producer. Those include Mannville stack exploration rights in Alberta, thermal heavy oil prospects at Handel, Sask., and legacy McCully gas production in New Brunswick. Tributary is to be led by current Headwater management, with Neil Roszell as executive chair and Jason Jaskela as president and chief executive officer. Shareholders of both Tamarack and Headwater would retain exposure to those exploration assets through the new company.
The structure is a familiar one in Canadian oil and gas, in which a merger of producing assets is paired with the creation of a smaller, higher-risk exploration vehicle that carries the assets the larger company does not intend to develop as a priority. It allows the combined producer to present investors with a focused Clearwater story while leaving the more speculative acreage in a separate listed entity.
Several details remain outstanding. The reported terms did not include a value for Tributary Exploration or a date for when it would begin trading, and the companies gave a quarter rather than a specific closing date. Transactions of this size are customarily subject to shareholder and regulatory approvals, and neither company has published a shareholder meeting date. Nothing in the announcement as reported addressed office consolidation or staffing at the two companies, which employ separate management teams in Calgary.
Tamarack Valley Energy and Headwater Exploration both trade on the Toronto Stock Exchange.
