Voyager Oil & Gas, Inc. (NYSE MKT:VOG) (“Voyager”) and
Emerald Oil Inc. (“Emerald Oil”), a wholly owned subsidiary of
Emerald Oil & Gas NL (ASX: EMR) (“Emerald Australia”), today
announced that they have entered into a securities purchase
agreement whereby Voyager will acquire Emerald Oil to create a
U.S.-based oil and gas company that will focus on select oil and
gas basins in the Rocky Mountain region. The transaction will
combine the companies’ oil-producing assets in the Williston Basin,
specifically in the Bakken and Three Forks plays located in North
Dakota and Montana, with Emerald Oil’s acreage position focusing on
the Niobrara shale in the Sandwash Basin located in Colorado and
Wyoming.
The transaction will significantly expand the acreage position
of both companies in the Williston Basin. The combination is
intended to create an oil and gas company with operating
capabilities that has the ability to effectively manage a multi-rig
drilling program in the Rocky Mountains and extract maximum value
from both of its operated and non-operated drilling programs. The
transaction will also realign individual management
responsibilities of the combined company’s executives in order to
allow each executive to focus on his core area of professional
expertise. The combined company will begin the transition from a
non-operating business model to an operating business model with
its first operated well in Dunn County, North Dakota, which is
planned to spud in early 2013 and will be followed by a continuous
single-rig drilling program in 2013. The combined company intends
to leverage its extensive technical Williston Basin well database
to optimize the designs of future wells.
The combined company will operate as Emerald Oil and will be
headquartered in Denver, Colorado and maintain its lease
acquisition program from Billings, Montana focused on the Williston
Basin.
“The untapped oil and gas reserves in the Western United States
have reshaped the North American energy markets,” said McAndrew
Rudisill, President of Emerald Oil. “The combination of Voyager and
Emerald Oil underscores our commitment to developing an operated
U.S. shale oil company. Today’s announcement accelerates our
strategy of using our position in the Williston Basin to create a
company focused on Bakken and Three Forks development, two of the
most prolific and extensive shale oil plays in the U.S.”
“This is a transformational event that is expected to benefit
the shareholders of both companies,” said J.R. Reger, Voyager’s
Chief Executive Officer, who will serve as Executive Chairman of
the combined company. “The combination of two highly experienced
management teams and Boards of Directors, who in aggregate have
been involved with billions of dollars of oil and gas project
developments, along with the company’s strategically located
acreage, provides the combined company with a strong foundation
upon which to drive company growth. The combination of our two
companies will enable our business operations to realize their full
potential, continue to grow and deliver value for
shareholders.”
Pro Forma Asset Allocation:
Upon closing, the combined company will control the following
operated and non-operated leasehold positions:
Williston Basin
The combined company will hold approximately
43,500 net acres in the Williston Basin. Hunt Oil, Marathon Oil,
Slawson Exploration, Whiting Petroleum, Continental Resources and
Occidental Petroleum are the most active direct offset operators
near the company’s operated position in Dunn County. In the
non-operated position, StatOil, Oasis Petroleum, Continental
Resources, Denbury Resources, Slawson Exploration, Whiting
Petroleum, Newfield Exploration, Hess Corporation and EOG
Resources, among many others, are all major operators.
- Operated: approximately 6,900 net acres
in Dunn County, North Dakota;
- Non-Operated: approximately 6,800 net
acres in core focus areas available for conversion to operated
model; and
- Non-Operated: approximately 29,800 net
acres with a majority of acreage in Williams, McKenzie, Dunn and
Mountrail Counties in North Dakota and Richland County,
Montana.
Emerging Oil Plays:
Sandwash Basin Niobrara
The combined company will hold 45,000 net
acres in the Sandwash Basin Niobrara shale oil play in Moffat and
Routt Counties, Colorado and Carbon County, Wyoming, which is being
drilled and developed by offset operators such as Shell Oil,
Quicksilver Resources and Gulfport Energy.
- Non-Operated: approximately 45,000 net
acres in the Sandwash Basin Niobrara, with Emerald Oil able to
propose operations under its joint venture agreements.
Heath Shale Oil
The combined company will hold approximately
33,500 net acres prospective for Heath shale oil in Musselshell,
Petroleum, Garfield and Fergus Counties, Montana. Cirque Resources,
Fidelity Exploration and Production, Central Montana Resources,
Endeavour International and True Oil are the most active offset
operators in the Heath.
- Operated: approximately 13,700 net
acres; and
- Non-Operated: approximately 19,800 net
acres.
Other Resource Plays:
Tiger Ridge Gas Play
The combined company will hold approximately
74,700 net operated acres prospective for the Tiger Ridge gas play
in Blaine, Hill and Chouteau Counties, Montana. Devon Energy is the
most active offset operator in the Tiger Ridge gas play.
Denver-Julesburg (“DJ”) Basin Niobrara
The combined company will hold approximately
2,400 net non-operated acres in the DJ Basin Niobrara.
New Management Team and Board of Directors Add Experience
& Technical Talent
Upon closing, the combined company’s new management team will
have a wealth of experience and a proven track record of success in
the oil and gas industry. The combined management team and
directors will own approximately 9% of the combined company
immediately after the transaction closes, aligning their interest
with that of shareholders.
- J.R. Reger, Voyager’s current Chief
Executive Officer, will become Executive Chairman of the combined
company. Mr. Reger has 18 years of experience in oil and gas lease
management. Prior to serving as CEO of Voyager, Mr. Reger was the
President of South Fork Exploration, LLC, a mineral leasing company
in Montana.
- Mike Krzus, currently a Director and
Chief Executive Officer of Emerald Oil, will serve as a Director
and as the Chief Executive Officer of the combined company. Mr.
Krzus has 29 years of experience with Woodside Petroleum and Shell
Oil, where he managed onshore and offshore oil and gas field
development and international business development.
- McAndrew Rudisill, currently Chairman
and President of Emerald Oil, will serve as a Director and the
President of the combined company. Mr. Rudisill has 11 years of
experience in natural resource investment and management. Prior to
joining Emerald Oil, Rudisill was Founder and Managing Partner of
Pelagic Capital Advisors.
- Paul Wiesner, Emerald Oil’s current
Chief Financial Officer, will be the Chief Financial Officer of the
combined company. Mr. Wiesner was formerly Chief Financial Officer
of Tracker Resource Development II, LLC, a pure play Williston
Basin operator that sold its assets to Hess Corporation for $1
billion in December 2010.
- Karl Osterbuhr will serve as Vice
President of Exploration and Business Development for the combined
company. Mr. Osterbuhr has over 20 years of U.S. oil and gas
exploration and operations experience.
- Mitch Thompson, Voyager’s current Chief
Financial Officer, will serve as Chief Accounting Officer for the
combined company.
- Marty Beskow, Voyager’s current
Executive Vice President, will become Vice President of
Finance/Capital Markets for the combined company.
In connection with the closing of the acquisition of Emerald
Oil, five of the members of Voyager’s Board of Directors will
resign, and their vacancies will be filled with directors who have
extensive knowledge and industry expertise. Following the closing,
J.R. Reger, McAndrew Rudisill and Mike Krzus will serve as
directors of the combined company, as will the following:
- Lyle Berman, Voyager’s current Chairman
of the Board, who is also the Chairman and Chief Executive Officer
of Lakes Entertainment (NASDAQ: LACO).
- Duke Ligon was formerly General Counsel
of Devon Energy (NYSE: DVN), where he oversaw their mergers and
acquisition team and helped build Devon Energy up from a $200
million market capitalization company to over a $70 billion market
capitalization company.
- Seth Setrakian, who is a Managing
Member of First New York Securities.
- Dan Spears, who is a Partner and
Portfolio Manager of Swank Capital, LLC.
Transformation to an Operating Exploration & Production
Company Focused on Shale Oil
Voyager’s demonstrated ability to effectively acquire acreage in
the Williston Basin will be combined with Emerald Oil’s technically
experienced and operationally capable management team to create a
well positioned oil & gas company focused on the Williston
Basin. The combined company is expected to have the ability to
better control its drilling and completion operations program and
increase its operated acreage footprint to focus on growing
production and reserves and maximize risked returns from both its
operated and non-operated drilling programs.
The combined company’s operating team will begin to execute its
initial multi-well development program in Dunn, ND, guided by well
results from nearby wells, including several successful wells where
the combined company will hold a non-operated interest. Technical
well information from non-operated wells in this area and the large
database of legacy well data from Voyager's non-operated
participation in wells in and around Emerald Oil’s targeted
operating areas provide critical technical information to optimize
the well designs of the combined company’s operated drilling
prospects.
All non-operated well authorizations for expenditure (AFEs) will
be carefully analyzed based upon geological characteristics,
geographic position within the basin, technical aspects of the
proposed well and completion design, past operator performance and
quantitative analysis of directly offsetting well production
performance. Capital efficiency and rate of return will be guiding
metrics for capital deployment to the combined company’s operated
and non-operated drilling portfolio.
With respect to land management, the combined company is
expected to be in a position to benefit from lease turnover in the
Williston Basin. The land team is ready to focus on high grading
its large non-operated acreage position as a first step in the
Company’s strategy to convert to operated positions in selected
areas in a capital-efficient manner.
Transaction Highlights
Under the terms of the securities purchase agreement, at closing
and subject to certain adjustments, Voyager will acquire 100% of
Emerald Oil’s outstanding equity interests in exchange for up to
19.9% of Voyager common stock (approximately 11.6 million shares)
and assume approximately USD 19.0 million of Emerald Oil’s
outstanding debt. Upon closing, Voyager’s existing shareholders
will own approximately 80% of the combined company with Emerald
owning the remaining 20%. The common stock to be issued by Voyager
to Emerald Australia is not being registered under federal or state
securities laws.
The Boards of Directors of both Voyager and Emerald Australia
have unanimously approved the transaction. The consummation of the
transaction contemplated by the securities purchase agreement,
including those set forth in this press release, is subject to
customary closing conditions, including all applicable regulatory
approvals and the completion of due diligence. The transaction is
expected to close by the end of July 2012.
Following the closing of the transaction, the parties anticipate
replacing Voyager’s ticker symbol on NYSE MKT with “EO.” Emerald
Australia will continue to be listed on the ASX under the ticker
symbol “EMR.”
For further information, a copy of the investor presentation is
available on both companies’ websites at
http://emeraldoilandgas.com/ and http://www.voyageroil.com/.
Advisors
Canaccord Genuity acted as financial advisor to Voyager, and
Mayer Brown LLP acted as legal counsel.
Johnson Rice & Company L.L.C. acted as financial advisor to
Emerald Oil, and Messner Reeves, LLC acted as legal counsel.
About Voyager Oil & Gas
Voyager Oil & Gas, Inc. combines low overhead, organic
acreage acquisition and strong joint venture relationships to
exploit its oil and gas prospects. Voyager is an exploration and
production company focused on acquiring acreage in prospective
natural resource plays in the continental United States. The
Company's primary business is focused on properties in North Dakota
and Montana targeting the Bakken and Three Forks shale oil
formations. Voyager currently controls approximately 144,000 net
acres in the following five primary prospect areas:
- approximately 33,000 core net acres
targeting the Bakken and Three Forks shale oil formations in North
Dakota and Montana;
- approximately 33,500 net acres in a
joint venture targeting the Heath shale oil formation in
Musselshell, Petroleum, Garfield and Fergus Counties of
Montana;
- approximately 2,400 net acres in the
Denver-Julesburg Basin targeting the Niobrara shale oil formation
in Colorado and Wyoming;
- approximately 800 net acres targeting a
Red River prospect in Montana; and
- approximately 74,700 net acres in a
joint venture in and around the Tiger Ridge natural gas field in
Blaine, Hill and Chouteau Counties of Montana.
For additional information, visit Voyager’s website at:
http://www.voyageroil.com/.
About Emerald Oil
Emerald Oil Inc is a wholly owned subsidiary of Emerald Oil
& Gas NL (ASX: EMR, EMRO), an Australian company listed on the
Australian Securities Exchange. Emerald Oil was formed by EMR in
2011, as part of its U.S. shale strategy, with a view to
establishing Emerald Oil as an active, operating U.S. oil company
focused on unconventional resource plays in the Rocky Mountain
region. Emerald Oil's primary objectives in the short term are to
initiate its first operated drilling program on its Williston Basin
Bakken and Three Forks shale oil assets located in North Dakota and
to develop its large acreage holding in the Sandwash Basin Niobrara
shale oil play located in NW Colorado and SW Wyoming. Emerald Oil
currently holds approximately 55,000 net acres in two project
areas:
- approximately 10,600 net acres located
in Dunn County, North Dakota, with 6,900 net acres expected to be
operated by the Company; and
- approximately 45,000 net acres in joint
venture with Entek Energy Ltd in the Sandwash Basin Niobrara shale
oil play, located in Mofatt and Routt Counties, Colorado and Carbon
County, Wyoming.
For additional information, visit Emerald’s website at
http://emeraldoilandgas.com.
Forward-Looking Statement
Certain statements included in this news release contain
"forward-looking statements" within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934. We caution you
that assumptions, expectations, projections, intentions, plans,
beliefs or similar expressions used to identify forward-looking
statements about future events may, and often do, vary from actual
results and the differences can be material from those expressed or
implied in such forward looking statements. Some of the key factors
that could cause actual results to vary from those we expect
include, without limitation, volatility in commodity prices for
crude oil and natural gas, access to capital markets and the
condition of the capital markets generally, as well as ability to
access them, the timing of planned capital expenditures,
unanticipated cash flow restrictions, uncertainties in estimating
reserves and forecasting production results, operational factors
affecting the commencement or maintenance of producing wells and
uncertainties regarding environmental regulations or litigation and
other legal or regulatory developments affecting our business. We
assume no obligation and expressly disclaim any duty to update the
information contained herein except as required by law.
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