Obsidian Energy Ltd. is proposing a merger with Bonterra Energy Corp.
The proposed deal would see Bonterra shareholders own about 48 per cent of the combined company.
In a letter to Bonterra chair and chief executive George Fink, Obsidian offered to swap two of its shares for each Bonterra share.
However, Bonterra shares currently trade for more than double the price of Obsidian shares. Bonterra shares closed at $1.50 on the Toronto Stock Exchange on Friday, while Obsidian shares closed at 53 cents.
Obsidian says Bonterra shares currently trade at a premium to its own, but that it does not believe that will be sustained if it remains a stand-alone entity.
It says it will consider an increased exchange ratio if Bonterra is able to demonstrate additional value.
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