TSX: TVE
CALGARY, AB, Dec. 21, 2020 /CNW/ - Tamarack Valley Energy Ltd.
("Tamarack" or the "Company") (TSX: TVE) is pleased
to announce the closing of two strategic acquisitions (together,
the "Acquisitions") which establish a significant
consolidated and operated position in the Clearwater oil play in the Greater Nipisi
area, along with interests in the Jarvie area of Alberta, for a total net purchase price of
$74.0 million, after deducting the
proceeds from the sale of a 2% newly created gross overriding
royalty (the "GORR Disposition") on a select portion of the
acquired properties. Pursuant to the Acquisitions, Tamarack
acquired approximately 2,000 barrels per day of crude oil
production and 107,000 net acres of Clearwater rights (the "Assets") and
now controls and operates 100% of the Greater Nipisi acquired
assets. The Company is also pleased to announce the completion of a
$47 million private placement equity
financing (the "Financing").
The Acquisitions and the Financing provide Tamarack with a
significant position in one of the most economic oil plays in
Western Canada and further the
Company's strategy of maintaining a resilient balance sheet while
pursuing opportunities to enhance free adjusted funds flow and
sustainability.
Acquisitions
Tamarack, through its wholly owned subsidiary Tamarack
Acquisition Corp., has acquired all of the issued and outstanding
shares of Woodcote Oil Corp. ("Woodcote"), a Clearwater focused private company (the
"Corporate Acquisition"). The Corporate Acquisition secured
Tamarack a 50% operated working interest in the Greater Nipisi
area, an established Clearwater
development area with top decile economics in the Western Canadian
Sedimentary Basin.
Tamarack, through its wholly owned subsidiary Tamarack
Acquisition Corp., has also acquired a 50% working interest in the
"Greater Nipisi" assets and an approximately 50 to 100%
working interest in the Jarvie
assets from Highwood Oil Company Ltd. ("Highwood") with an
effective date of November 1, 2020
(the "Asset Acquisition").
In conjunction with the Acquisitions, Tamarack has entered into
an arrangement with Topaz Energy Corp. to sell a newly created 2.0%
gross overriding royalty ("GORR") on a select portion of the
Assets, which is expected to close before December 31, 2020. Tamarack has committed to
spending $80.0 million of capital to
further develop the GORR lands prior to December 31, 2022.
Financing
Concurrent with the completion of the Acquisitions, Tamarack
issued, on a non-brokered private placement basis, 40,925,000
common shares ("Common Shares") at a price of $1.15 per Common Share for aggregate gross
proceeds of approximately $47
million, of which $2.1 million
was subscribed for by directors and officers of Tamarack. The
proceeds from the Financing will be initially used to reduce
indebtedness and thereafter to partially fund the Company's 2021
capital expenditures.
The Common Shares issued in connection with the Financing are
subject to a statutory hold period of four months plus one day, in
accordance with applicable securities legislation. The Financing
remains subject to the final approval of the Toronto Stock
Exchange.
Advisors
Peters & Co. Limited acted as financial advisor to Tamarack
with respect to the Acquisitions, the GORR Disposition and the
Financing.
National Bank Financial Inc. acted as financial advisor to
Tamarack with respect to the Corporate Acquisition, the GORR
Disposition and the Financing.
CIBC Capital Markets and Stifel FirstEnergy acted as strategic
advisors to Tamarack.
Stikeman Elliott LLP acted as counsel to Tamarack with respect
to the Acquisitions, the GORR Disposition and the Financing.
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas exploration and production company
committed to long-term growth and the identification, evaluation
and operation of resource plays in the Western Canadian Sedimentary
Basin. Tamarack's strategic direction is focused on two key
principles: (i) targeting repeatable and relatively predictable
plays that provide long-life reserves; and (ii) using a rigorous,
proven modeling process to carefully manage risk and identify
opportunities. The Company has an extensive inventory of low-risk,
oil development drilling locations focused primarily in the Cardium
and Viking fairways in Alberta
that are economic over a range of oil and natural gas prices. With
this type of portfolio and an experienced and committed management
team, Tamarack intends to continue delivering on its strategy to
maximize shareholder returns while managing its balance sheet.
Disclosure of Oil and Gas Information
Unit Cost Calculation. For the purpose of calculating
unit costs, natural gas volumes have been converted to a boe using
six thousand cubic feet equal to one barrel unless otherwise
stated. A boe conversion ratio of 6:1 is based upon an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
This conversion conforms with NI 51-101 - Standards of
Disclosure for Oil and Gas Activities. Boe may be misleading,
particularly if used in isolation.
Forward Looking Information
This press release contains certain forward-looking information
(collectively referred to herein as "forward-looking statements")
within the meaning of applicable Canadian securities laws.
Forward-looking statements are often, but not always, identified by
the use of words such as "guidance", "outlook", "anticipate",
"target", "plan", "continue", "intend", "consider", "estimate",
"expect", "may", "will", "should", "could" or similar words
suggesting future outcomes. More particularly, this press release
contains statements concerning: Tamarack's business strategy,
objectives, strength and focus; the Assets, including anticipated
benefits and strategic rationale; the GORR Disposition; Tamarack's
liquidity and financial position, the factors contributing thereto,
including the timing and level capital expenditures.
The forward-looking statements contained in this document are
based on certain key expectations and assumptions made by Tamarack,
including relating to: Tamarack, Woodcote, Highwood, the Assets and
the GORR Disposition, including receipt of all required approvals;
prevailing commodity prices, price volatility, price differentials
and the actual prices received for the Company's products; the
availability and performance of drilling rigs, facilities,
pipelines and other oilfield services; the timing of past
operations and activities in the planned areas of focus; the
drilling, completion and tie-in of wells being completed as
planned; the performance of new and existing wells; the application
of existing drilling and fracturing techniques; prevailing weather
and break-up conditions; royalty regimes and exchange rates; the
application of regulatory and licensing requirements; the continued
availability of capital and skilled personnel; the ability to
maintain or grow the banking facilities; the accuracy of Tamarack's
geological interpretation of its drilling and land opportunities,
including the ability of seismic activity to enhance such
interpretation; and Tamarack's ability to execute its plans and
strategies.
Although management considers these assumptions to be reasonable
based on information currently available, undue reliance should not
be placed on the forward-looking statements because Tamarack can
give no assurances that they may prove to be correct. By their very
nature, forward-looking statements are subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to: the oil and gas
industry in general (e.g. operational risks in development,
exploration and production; and delays or changes in plans with
respect to exploration or development projects or capital
expenditures); commodity prices; the uncertainty of estimates and
projections relating to production, cash generation, costs and
expenses; health, safety, litigation and environmental risks;
access to capital; and the COVID-19 pandemic. Due to the nature of
the oil and natural gas industry, drilling plans and operational
activities may be delayed or modified to react to market
conditions, results of past operations, regulatory approvals or
availability of services causing results to be delayed. Please
refer to Tamarack's annual information form for the year ended
December 31, 2019 (the "AIF"),
management's discussion and analysis for the year ended
December 31, 2019 and management's
discussion and analysis for the period ended September 30, 2020 (together, the "MD&A") for
additional risk factors relating to Tamarack. The AIF and the
MD&A can be accessed either on Tamarack's website at
www.tamarackvalley.ca or under the Company's profile on
www.sedar.com. The forward-looking statements contained in this
press release are made as of the date hereof and the Company does
not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, except as required by
applicable law. The forward-looking statements contained herein are
expressly qualified by this cautionary statement.
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about Tamarack's prospective results of operations and
production, balance sheet, adjusted funds flow, free adjusted funds
flow, shareholder value and components thereof, including pro forma
the Acquisitions, the Financing and the GORR Disposition, all of
which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth in the above
paragraphs. FOFI contained in this document was made as of the date
of this document and was provided for the purpose of providing
further information about Tamarack's future business operations.
Tamarack disclaims any intention or obligation to update or revise
any FOFI contained in this document, whether as a result of new
information, future events or otherwise, unless required pursuant
to applicable law. Readers are cautioned that the FOFI contained in
this document should not be used for purposes other than for which
it is disclosed herein.
Non-IFRS Measures.
Certain financial measures referred to in this press release,
such as adjusted funds flow and free adjusted funds flow, are not
prescribed by IFRS. Tamarack uses these measures to help evaluate
its financial and operating performance as well as its liquidity
and leverage. These non-IFRS financial measures do not have any
standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other issuers.
"Adjusted funds flow" is calculated by taking cash-flow
from operating activities and adding back changes in noncash
working capital and expenditures on decommissioning obligations
since Tamarack believes the timing of collection, payment or
incurrence of these items is variable. Expenditures on
decommissioning obligations may vary from period to period
depending on capital programs and the maturity of the Company's
operating areas. Expenditures on decommissioning obligations are
managed through the capital budgeting process which considers
available adjusted funds flow. Tamarack uses adjusted funds flow as
a key measure to demonstrate the Company's ability to generate
funds to repay debt and fund future capital investment. Adjusted
funds flow can also be calculated on a per boe basis. Adjusted
funds flow per share is calculated using the same weighted average
basic and diluted shares that are used in calculating income (loss)
per share.
"Free adjusted funds flow" is calculated by taking
adjusted funds flow and subtracting capital expenditures, excluding
acquisitions and dispositions. Management believes that free
adjusted funds flow provides a useful measure to determine
Tamarack's ability to improve returns and to manage the long-term
value of the business.
Please refer to the MD&A for additional information relating
to Non-IFRS measures. The MD&A can be accessed either on
Tamarack's website at www.tamarackvalley.ca or under the Company's
profile on www.sedar.com.
SOURCE Tamarack Valley Energy