Petro-Canada, Calgary, (Toronto: PCA; NYSE: PCZ) plans to buy Prima Energy Corp., Denver, (Nasdaq: PENG) for US$39.50 per share in a deal valued at US$534 million (C$719 million). Prima has no debt and is expected to have approximately US$60 million in cash at closing. Prima produces 55 million cu. ft. per day of gas equivalent before royalties, largely from the Powder River and Denver-Julesburg basins. Approximately 40% is coalbed-methane and the remainder comes mostly from tight-gas reservoirs. Prima's 360,000 undeveloped acres include positions in the Green River, Uinta and Wind River basins. Petro-Canada expects production to double by 2007. Prima also has identified 1,600 drillable locations. 2003 year-end reserves before royalties were 152 billion cu. ft. equivalent of proved and 552 billion cu. ft. equivalent of proved plus probable. The implied deal value is US$3.51 per proved thousand cu. ft. equivalent. Rockies operations will continue to be run from Denver principally by Prima's existing management and staff. The deal will be financed with a US$400-million credit facility, provided by BMO Nesbitt Burns, and existing committed credit lines. Post-closing, Petro-Canada's net debt-to-cash flow ratio will be about 1.0 times and net debt-to-debt plus equity will be approximately 30%, including the effect of the previously announced acquisition of interests in Buzzard Field in the U.K. North Sea from Intrepid. The deal may close in July. BMO Nesbitt Burns was exclusive financial advisor to Petro-Canada. Financial advisory services were provided to Prima by Goldman, Sachs & Co. and Waterous & Co. The former also rendered a fairness opinion to Prima.