CALGARY,
Alberta, Sept. 24, 2012
/PRNewswire/ - Equal Energy Ltd. ("Equal" or "the Company") (TSX:
EQU) (NYSE: EQU) is pleased to announce that, through one of its
wholly owned subsidiaries, it has closed an agreement with Atlas
Resource Partners, L.P. ("Atlas") (NYSE: ARP) whereby Equal has
sold its interest in its Northern
Oklahoma assets located in Grant, Garfield and Alfalfa counties for total cash consideration
of US$40 million, effective
July 1st 2012. The
assets sold include production of 1,400 barrels of oil equivalent
per day ("boe/day") (July 2012
average; 73% natural gas, 25% NGL, 2% oil), related infrastructure
and interests in approximately 8,550 acres of Mississippian
lands.
Don Klapko,
President and Chief Executive Officer said, "The sale of the
Northern Oklahoma asset is a key
part of Equal's strategic direction which will:
- High grade our Oklahoma
business by focusing on the Central
Oklahoma area where the liquids content is higher than in
the Northern asset,
- Retain the majority of our Oklahoma assets providing significant upside
for our shareholders associated with any recovery of natural gas
and NGL prices to more historical levels,
- Best fit the risk-reward profile of a company our size in an
area where we've had greater than 90 percent drilling success and
have a multi-year inventory of drilling prospects, and
- Further improve the Company's balance sheet.
I believe the decision to sell Northern Oklahoma and retain Central Oklahoma sets up significant potential
benefit for our shareholders. Equal's remaining Central Oklahoma assets are very focused with
identified drilling inventory backed by a proven track record of
drilling success as well as upside from improving commodity
prices."
The Northern
Oklahoma sale is at an attractive valuation as the Company
received the equivalent amount of $2,500 per acre for its remaining Mississippian
acreage plus approximately 6 times annualized operating cash flows
from the Northern Oklahoma assets
based on the first six months of 2012.
Equal will use the proceeds of the sale to
reduce amounts outstanding on its credit facility to approximately
$70 million and total debt to
approximately $115 million. The
Company's banking syndicate is reviewing the limit on the
$200 million credit facility in light
of this disposition. Equal expects the proceeds of
$40 million will materially exceed
the borrowing base associated with the Northern Oklahoma assets. The Central
Oklahoma assets currently produce 7,800 boe/day of natural gas,
rich with NGL's which comprise 48% of total volume. Adjusting
for the sale, Equal's July corporate production was 9,350 boe/d
consisting of 45% natural gas, 42% NGL's and 13% oil compared to
50%, 39% and 11% before the sale.
The Strategic Review is ongoing and management
and the Special Committee of the board of directors continue to
make progress as we turn our focus to Equal's Canadian strategy and
potential transactions that we believe will further benefit our
shareholders.
About Equal Energy Ltd.
Equal is an exploration and production oil and
gas company based in Calgary, Alberta,
Canada with its United
States operations office located in Oklahoma City, Oklahoma. Equal's shares and
convertible debentures are listed on the Toronto Stock Exchange
under the symbols (EQU, EQU.DB.B) and Equal's shares are listed on
the New York Stock Exchange under the symbol (EQU). The portfolio
of oil and gas properties is geographically diversified with
producing properties located in Alberta and Oklahoma Equal has compiled a
multi-year drilling inventory for its properties including its new
oil play opportunities in the Cardium and Viking in central
Alberta in addition to its
extensive inventory of drilling locations in the Hunton
liquids-rich, natural gas play in Oklahoma.
Forward-Looking Statements
Certain information in this press release
constitutes forward-looking statements under applicable securities
law including ongoing drilling plans and the likely retention of
the Central Oklahoma assets.
Any statements that are contained in this press release that are
not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as "may," "should," "anticipate,"
"expects," "seeks" and similar expressions.
Forward-looking statements necessarily
involve known and unknown risks, such as risks associated with oil
and gas production; marketing and transportation; loss of markets;
volatility of commodity prices; currency and interest rate
fluctuations; imprecision of reserve estimates; environmental
risks; competition; incorrect assessment of the value of
acquisitions; failure to realize the anticipated benefits of
acquisitions or dispositions; inability to access sufficient
capital from internal and external sources; changes in legislation,
including but not limited to income tax, environmental laws and
regulatory matters. Readers are cautioned that the foregoing
list of factors is not exhaustive.
Readers are cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated
forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.
Additional information on these and other
factors that could affect Equal's operations or financial results
are included in Equal's reports on file with Canadian and U.S.
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com), the SEC's website (www.sec.gov),
Equal's website (www.equalenergy.ca) or by contacting Equal.
Furthermore, the forward looking statements contained in this news
release are made as of the date of this news release, and Equal
does not undertake any obligation to update publicly or to revise
any of the included forward-looking statements, whether as a result
of new information, future events or otherwise, except as expressly
required by securities law.
Conversion: Natural gas volumes recorded in
thousand cubic feet ("mcf") are converted to barrels of oil
equivalent ("boe") using the ratio of six (6) mcf to one (1) barrel
of oil ("bbl"). Boe's may be misleading, particularly if used
in isolation. A boe conversion ratio of 6 mcf: 1bbl is based
on an energy equivalent conversion method primarily applicable at
the burner tip and does not represent a value equivalent at the
wellhead. All dollar values are in Canadian dollars unless
otherwise stated.
SOURCE Equal Energy Ltd.