Greenfire Resources Acquires Connacher Oil for C$1.28 Billion, Doubling Production to 34,000 Bbl per Day

Greenfire Resources Ltd. (NYSE: GFR, TSX: GFR) announced on July 13, 2026, a definitive agreement to acquire Connacher Oil and Gas Limited for approximately C$1.277 billion in cash. The transaction is expected to close in August 2026, subject to customary regulatory approvals. BMO Capital Markets and National Bank Capital Markets are advising Greenfire on the transaction.

Adjacent Assets Form an Integrated Alberta SAGD Complex

Connacher's Great Divide oil sands project sits directly adjacent to Greenfire's existing Hangingstone facilities, both southwest of Fort McMurray in Alberta's Athabasca region. Hangingstone currently produces approximately 14,500 barrels per day. Great Divide adds approximately 19,500 barrels per day, all bitumen, operating at a steam-oil ratio of 3.0x. The combined company targets 2026 production of 34,000 barrels per day and long-term capacity of approximately 65,000 barrels per day across the two assets.

The combined entity holds 850 million barrels of proved plus probable reserves, ranking it sixth among Canadian oil producers by 2P reserve size. Greenfire held 409 million barrels before the deal; Connacher contributes 441 million barrels. The reserve life index for the merged company stands at 68 years at current production rates.

Waterous Energy Fund Controls the Deal's Equity Tranche

Waterous Energy Fund, a Calgary-based private equity firm, holds approximately 72% of Greenfire's outstanding common shares. The fund committed a minimum C$575 million standby guarantee for the anticipated rights offering, making Waterous the structural guarantor of the deal's equity component. That guarantee means Waterous can fund the full equity raise regardless of broader shareholder participation. Greenfire's current management team brings more than 15 years of combined direct operating experience at Connacher's assets.

Geographic proximity drives the synergy rationale. Shared pipeline networks, combined steam generation infrastructure, and aggregated marketing volumes support Greenfire's C$30 million annual synergy target. Savings cover midstream, marketing, operating cost, and general and administrative functions. At C$30 million annually, the target represents 19% of Connacher's sustaining free cash flow at a US$70 WTI reference price.

Three-Tranche Financing with RBL Upsized to C$1.0 Billion

Greenfire funded the acquisition through three tranches. A reserves-based lending facility, upsized to C$1.0 billion from C$275 million previously, provides approximately C$700 million of initial draw. A C$575 million underwritten bridge facility covers the remaining purchase price. The bridge will be repaid through a rights offering priced at no more than C$6.74 per share, a 15% discount to the five-day volume-weighted average price as of July 10, 2026.

After the rights offering closes, the company expects leverage of approximately 1.7 times debt-to-2027 adjusted EBITDA. Combined tax pools reach C$2.8 billion, including C$2.0 billion in fully deductible pools. Greenfire projects no cash taxes until after 2030 at current forward strip pricing.

Reserve Economics and Current WCS Pricing

At C$1.277 billion against Connacher's 441 million barrels of 2P reserves, Greenfire pays approximately C$2.89 per barrel of reserves acquired. Connacher's 62-year reserve life index at current output underpins that valuation. Greenfire's Hangingstone assets carry a 77-year reserve life, producing a combined 68-year weighted average across the merged entity.

The deal was modeled at US$70 WTI as the base case. WTI crude settled at US$82.49 per barrel on Friday, July 18's CME close, providing approximately 17% commodity upside against the model assumption. WCS differential offsets part of that gain: WCS traded at a US$15.84 discount to WTI this week, placing Alberta heavy oil realized prices at approximately US$66.65 per barrel. Dividing Greenfire's C$30 million annual synergy across 34,000 barrels per day of combined production over 365 days yields approximately US$2.42 per barrel of annual netback improvement at that realized price.

At the 2027 forecast of approximately C$265 million in adjusted EBITDA at US$70 WTI, the deal prices at 4.8 times forward EBITDA. Sustaining capital for Great Divide runs approximately C$75 million annually to hold production near 19,500 barrels per day, against a base decline rate of 10 to 15 percent. Greenfire's combined 65,000-barrel-per-day long-term capacity target implies expansion across both assets as steam injection capacity is added over time.