Equal Energy Ltd. Announces Sale of Halkirk/Alliance/Wainwright/Clair Assets and Substantially All Remaining Non-producing Cana
September 28 2012 - 11:08AM
PR Newswire (Canada)
CALGARY, Alberta, Oct. 1, 2012 /CNW/ - Equal Energy Ltd. ("Equal"
or "the Company") : announces that it has entered into a definitive
agreement to sell several of its Canadian properties (the "Asset
Disposition") for a total cash consideration of $17.4 million,
subject to customary adjustments typical of transactions of this
type. The Asset Disposition includes Equal's interests in the
Halkirk, Wainwright, Alliance and Clair areas of Alberta. The
Asset Disposition excludes Equal's Cardium assets in the Lochend
area and certain royalty interests. The Asset Disposition is
anticipated to be completed on October 12, 2012 and has an
effective date of July 1, 2012. The Asset Disposition is the second
step in Equal's ongoing strategic review process. Equal's
management and Special Committee of the Board of Directors continue
to review opportunities with the Company's portfolio which now
consists primarily of the Cardium oil play in the Lochend area of
Alberta, certain royalty interests in Canada and the liquids rich
natural gas asset in Central Oklahoma. The Company has determined
that these Asset Disposition properties provide the least
attractive future returns among its portfolio of properties.
Drilling prospects on these properties cannot economically compete
for capital that is limited annually to cash flow. The Asset
Disposition also includes substantially all of Equal's
non-producing, suspended and abandoned wells in Alberta,
Saskatchewan and BC, such that Equal's remaining decommissioning
liabilities will be reduced significantly. Equal estimates that its
overall decommissioning provision on its balance sheet will drop by
approximately two thirds when the Asset Disposition is closed. The
assets sold have current production of approximately 745 boe/day
(July average), consisting of 85% medium and light oil with
estimated annualized operating cash flow of $7.8 million based on
the first six months of 2012. Adjusting for this sale and the
previously announced sale of Northern Oklahoma, Equal's current
corporate production is approximately 8,300 boe/day consisting of
48% natural gas, 45% NGL's and 7% oil. Equal will use the
proceeds of the sale to reduce amounts outstanding on its credit
facility to approximately $53 million and total debt including its
convertible debentures to approximately $98 million. 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 oil opportunity in the Lochend Cardium
play of 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, the timing or
certainty of the closing of the Asset Disposition, the use of
proceeds of the Asset Disposition, the reduction of decommissioning
liabilities of the Company and production estimates following the
completion of the Asset Disposition. 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. Equal Energy Ltd. CONTACT: Dell Chapman Chief
Financial Officer(403) 538-3580 or (877) 563-0262 Don
KlapkoPresident & CEO(403) 536-8373 or (877)
563-0262info@equalenergy.cawww.equalenergy.ca
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