Crescent Point Energy is scooping up fellow Canadian producer Hammerhead Energy in a cash-and-stock deal.

The transaction is valued at US$1.86 billion (CA$2.55 billion), including the assumption of approximately US$332 million (CA$455 million) of Hammerhead’s net debt, the companies announced after markets closed on Nov. 6.

The deal extends Alberta-based Crescent Point’s development runway in the Montney Shale with approximately 800 incremental drilling locations. At Crescent Point’s current pace, its premium inventory will grow to more than 20 years through the Hammerhead acquisition.

“This strategic consolidation is an integral part of our overall portfolio transformation,” said Craig Bryksa, president and CEO at Crescent Point. “The acquired assets, which are situated in the volatile oil window in the Alberta Montney and adjacent to our existing lands, provide significant value with premium drilling inventory, infrastructure ownership and scalable market access.”

After closing, Crescent Point will focus on development in the Montney and Kaybob Duvernay plays, while maintaining complementary, long-cycle assets in Saskatchewan.

The deal is expected to create the seventh-largest Canadian E&P by production volume. Crescent Point also expects to be the largest land owner in the Alberta Montney’s volatile oil window with the Hammerhead acquisition.

Crescent Point anticipates that the deal will be immediately accretive to its per share metrics and boost shareholder returns.

The company plans to increase its base dividend by 15% to $0.46/share on an annual basis after closing.

This summer, Crescent Point announced selling its North Dakota assets to a private operator for US$500 million (approximately CA$675 million) in cash.