An oil pump jack pumps oil in a field near Calgary.TODD KOROL/Reuters
Alberta's pension fund manager is pumping more cash into the province's battered oil drillers.
Western Energy Services Corp. said on Friday that it has tapped the Alberta Investment Management Corp. for a $215-million loan, marking the third time the fund manager has supported a Calgary-based service company since oil prices collapsed.
Under the deal, AIMCo is also buying about $11.4-million in Western stock in a private placement, pushing its stake in the company to 10 per cent. It also secured 7.1 million warrants to purchase Western shares at a later date.
The investment is AIMCo's latest in an oil-field services outfit, a segment of the industry that was clobbered as major producers slashed budgets and curtailed drilling to cope with dwindling cash flows through the downturn. AIMCo manages about $90-billion in assets.
Last year, AIMCo extended a $200-million loan to Calgary-based Calfrac Well Services Ltd. That deal also included an option to purchase shares. It also provided about $220-million in financing to Savanna Energy Services Inc.
Savanna was later purchased by rival Total Energy Services Inc. in a hostile deal after a competing offer from Western collapsed. That deal triggered demands by AIMCo for repayment from Savanna of $105-million in principal plus interest under a so-called change-of-control provision.
Calgary-based Western said it would use proceeds from the latest financing to pay down debt. The company is also selling 9.1 million shares for $1.25 each on a bought-deal basis to banks led by Peters & Co. Ltd. for proceeds of roughly $11.4-million. A source said the deal was sold out.
Western shares jumped as much as 4.5 per cent early Friday on the Toronto Stock Exchange before paring gains. The stock fetched around $1.37 in midafternoon trading, up 3 per cent but well under the $9 level reached in 2014.