Today, Provident Energy Trust (PVX: chart, web, Y!) offered to purchase Capitol Energy Resources Ltd. for 467 million Canadian dollars, or about $420.5 million USD.

Provident is paying a 3 percent premium for the company and a 10 percent premium to the 30-day average closing price. One down side is that PVX will assume Capitol’s net debt of about C$41 million.

Capitol owns a conventional oil field in Canada’s Alberta province. The company estimates the field holds 30 million barrels of proved and probable oil reserves.

The deal’s closing is subject to a two-thirds approval of Capitol shareholders and is contingent upon regulatory approvals, as usual. Provident expects to finance the transaction with C$325 million in debt plus credit facilities.

Provident shares rose 7 cents to close at $11.97 today, but gave it all back in after hours trading.

As I’ve mentioned before in posts about Chesapeake Energy, I’m not a fan of oil companies taking on debt to finance purchases. I’m more in favor of using some of that highly valued cash flow. But at least Provident isn’t offering up shares to pay off debt, like Chesapeake is wont to do!

I still like PVX, their dividends are still strong, and sitting on an additional 30 million barrels of reserves will surely help with depletion.

Investing, Stock Thoughts