Canadian firms merge to pursue carbon-free energy

Two small Canadian firms, Kiwetinohk Resources and Distinction Energy, said June 28 they will combine to pursue carbon-free energy solutions, including renewable electricity and blue and green hydrogen.

Under a plan of arrangement approved by both boards and expected to close in Q3 2021, Kiwetinohk Resources will acquire the 50% interest in Distinction (previously Delphi Energy) it doesn’t already own by exchanging each Distinction share for 20 Kiwetinohk shares. The combined company will continue as Kiwetinohk Resources.

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Kiwetinohk is mainly engaged in acquiring and developing high-netback oil and gas properties, generating electricity and manufacturing hydrogen from natural gas, while capturing CO₂ and storing it or using it in enhanced oil recovery operations. It also plans to capture solar and wind energy and convert it to electricity and potentially hydrogen.

A private company backed by ARC Financial, Kiwetinohk is led by CEO Pat Carlson, who along with various partners has built four oil and gas companies, including Seven Generations Energy, which was recently acquired by ARC Resources, and North American Oil Sands, which was sold to Norway’s Equinor.

“The combination of Kiwetinohk and Distinction will better position the resulting business to compete in the provision of energy products that have significantly reduced greenhouse gas emissions intensity relative to oil and gas industry norms of recent years,” Carlson said. “The global market requires more energy while ecosystems cannot tolerate emissions associated with the way the petroleum business has delivered energy in the past.”

Kiwetinohk and Distinction already have strong positions in the liquids-rich Montney and Duvernay horizons in Alberta and added to those positions when they partnered recently to acquire assets in the Simonette area of Alberta. The combined company, when taking into account the Simonette assets, will produce about 55mn ft³/day of natural gas and about 7,100 barrels/day of crude oil and natural gas liquids, mostly condensate.

Noting that the public is demanding an energy transition that will reduce CO₂and methane emissions, Carlson said half the challenge is acquiring low-cost natural gas assets, while the other half is converting those assets into clean forms of energy.

“Our hope is to build a power generator and hydrogen manufacturer with significance in the Alberta market,” he said. “The condensate associated with the gas in Distinction’s property bolsters the economics and provides a supply of gas that we expect to be among the lowest cost supplies in the Alberta market.”