- Bonterra shareholders continue to advise the Company they will
not tender their shares
- Bonterra is better positioned as a stand-alone entity
- Shareholders need to take no action to REJECT the offer
CALGARY, AB, Jan. 20, 2021 /CNW/ - Bonterra Energy Corp.
(www.bonterraenergy.com) (TSX: BNE) ("Bonterra" or the "Company")
and its Board of Directors reiterates its recommendation that
shareholders reject Obsidian Energy Ltd.'s ("Obsidian") conditional
unsolicited bid to acquire all of the issued and outstanding common
shares of Bonterra in exchange for shares of Obsidian (the "Hostile
Bid") and continues to strongly recommend that Bonterra
shareholders take no action and REJECT the Hostile
Bid by NOT TENDERING their shares.
- Bonterra remains focused on generating strong, sustainable,
free funds flow which can be directed to debt reduction and capital
spending.
- Bonterra's strategic plan as a stand-alone entity is expected
to grow production by approximately 30 percent, returning the
average annual production to pre–COVID levels of 13,000 BOE per
day1 in 2021.
- Bonterra's bank syndicate supports the Company's current plan
and has extended the maturity date of its senior credit facility to
the end of 2021 at the current borrowing base.
- The strong commitment of $45
million from the Business Development Bank of Canada ("BDC") strengthens Bonterra's
liquidity profile and provides options and funding for development
drilling and abandonment programs designed to enhance value for
shareholders.
- Bonterra is dedicated to responsible corporate practices and
the environment, and through a combination of the Site
Rehabilitation Program ("SRP") and other provincial programs, it is
expected that the Company could successfully reduce its inactive
well count by approximately 60 percent over the next two years
under current approvals.
- Through its longstanding history, Bonterra has the assets and
the people in place to continue pursuing profitable development of
its high-quality, Cardium light oil asset base to continue
generating long-term net asset value growth as the economy recovers
from the COVID-19 pandemic.
To date, Obsidian's Hostile Bid has proven to be unsuccessful,
with Bonterra shareholders overwhelmingly advising they will not
tender their shares. The Hostile Bid was recently amended to extend
the expiry and reduce the minimum number of outstanding Bonterra
shares that must be tendered, for its completion, from the
customary 66 2/3 percent down to 50 percent. This change indicates
that Obsidian does not expect that the higher tender condition can
be achieved.
Consistent with the rationale outlined within its
Directors' Circular dated October 5,
2020 and referenced in the letters mailed to shareholders
and filed on SEDAR, Bonterra's Board strongly advises that Bonterra
shareholders REJECT the Hostile Bid and TAKE NO
ACTION.
- Bonterra achieved many milestones in 2020, including: material
cost savings and efficiencies, funding secured through BDC and SRP
and a lending backstop from Export Development Canada. The Hostile
Bid does not attribute any value to these milestones or the
potential future success of Bonterra's actions to increase
shareholder value.
- Obsidian has not addressed its ability to obtain the
third-party consents and approvals required to complete the Hostile
Bid, including the consent of each of Obsidian's and Bonterra's
lenders, exposing Bonterra shareholders to an uncertain financing
plan and a potential capital structure that could result in future
dilution to Bonterra Shareholders.
- Obsidian's lending syndicate only granted an extension of its
credit facility to January 29, 2021,
a negative signal given the short period of the extension.
- Obsidian's significantly higher asset retirement obligations
and significant debt levels will leave Bonterra shareholders a
disproportionately higher allocation of future abandonment
liabilities and long term debt.
- Obsidian and its U.S. activist investor-led management team
have not demonstrated a track record of creating shareholder value
or the ability to create a "Cardium Champion".
-
- Obsidian has a history of senior executive resignations and
changes, with eight executive resignations or changes, including
three different Chief Financial Officers and three different Chief
Executive Officers, since January
2017.
- The rationale of the Hostile Bid is highly dependent on the
achievement of significant synergies and cost savings which remain
uncertain and unsubstantiated by Obsidian.
For more information, the Company's recent shareholder letters,
Directors' Circular and other relevant materials are available for
review on the Company's website at www.bonterraenergy.com or on
SEDAR at https://www.sedar.com/.
The Bonterra Board UNANIMOUSLY recommends that
Shareholders REJECT the Hostile Bid by taking no action – DO NOT
TENDER your Shares.
Shareholder Questions
Shareholders with questions are encouraged to call Bonterra's
information agent, Laurel Hill Advisory Group at 1-877-452-7184
(+1-416-304-0211 outside North
America) or email assistance@laurelhill.com
About Bonterra
Bonterra Energy Corp. is a conventional oil and gas corporation
with operations in Alberta,
Saskatchewan and British Columbia, focused on its strategy of
long-term, sustainable growth and value creation for shareholders.
The Company's shares are listed on The Toronto Stock Exchange under
the symbol "BNE".
Forward Looking Information
Certain statements contained in this release include statements
which contain words such as "anticipate", "could", "should",
"expect", "seek", "may", "intend", "likely", "will", "believe" and
similar expressions, relating to matters that are not historical
facts, and such statements of our beliefs, intentions and
expectations about development, results and events which will or
may occur in the future, constitute "forward-looking information"
within the meaning of applicable Canadian securities legislation
and are based on certain assumptions and analysis made by us
derived from our experience and perceptions. Forward-looking
information in this release includes, but is not limited to:
expectations regarding the effect of the Hostile Bid, the lack of
Bonterra shareholder support for the Hostile Bid and the Hostile
Bid being unlikely to proceed; expectations regarding production
growth and production volumes; expectations regarding Bonterra's
inactive well count; business strategy and outlook; expansion and
growth of our business and operations; and other such matters.
All such forward-looking information is based on certain
assumptions and analyses made by us in light of our experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors we believe are
appropriate in the circumstances. The risks, uncertainties and
assumptions are difficult to predict and may affect operations, and
may include, without limitation: risks and uncertainties relating
to the satisfaction of all conditions relating to the availability
of funding pursuant to government programs; foreign exchange
fluctuations; equipment and labour shortages and inflationary
costs; general economic conditions; industry conditions; changes in
applicable environmental, taxation and other laws and regulations
as well as how such laws and regulations are interpreted and
enforced; the ability of oil and natural gas companies to raise
capital; the effect of weather conditions on operations and
facilities; the existence of operating risks; volatility of oil and
natural gas prices; oil and gas product supply and demand; risks
inherent in the ability to generate sufficient cash flow from
operations to meet current and future obligations; increased
competition; stock market volatility; opportunities available to or
pursued by us; and other factors, many of which are beyond our
control.
Actual results, performance or achievements could differ
materially from those expressed in, or implied by, this
forward-looking information and, accordingly, no assurance can be
given that any of the events anticipated by the forward-looking
information will transpire or occur, or if any of them do, what
benefits will be derived therefrom. Except as required by law,
Bonterra disclaims any intention or obligation to update or revise
any forward-looking information, whether as a result of new
information, future events or otherwise. The forward-looking
information contained herein is expressly qualified by this
cautionary statement.
Oil and Gas Information
"BOE" refers to barrels of oil equivalent. Disclosure provided
herein in respect of a BOE may be misleading, particularly if used
in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an
energy conversion method primarily applicable at the burner tip and
does not represent a value equivalency at the wellhead.
Numerical Amounts
The reporting and the functional currency of the Company is
the Canadian dollar.
The TSX does not accept responsibility for the
accuracy of this release.
SOURCE Bonterra Energy Corp.
