CALGARY, ALBERTA--TUSK Energy Inc. ("TUSK") announced today that its take-over bid for all of the shares of Sunfire Energy Corporation ("Sunfire") has been successful. A total of 12,421,533 shares of Sunfire, representing approximately 94.3% of the issued and outstanding Sunfire shares, have been tendered and accepted for payment by TUSK.
The shares of Sunfire were halted prior to market opening today and will not recommence trading. TUSK will acquire the balance of the Sunfire shares not tendered to the bid pursuant to the compulsory acquisition procedures available to it under the Business Corporations Act (Alberta).
Coincident with the closing of the Sunfire acquisition, 9,500,000 subscription receipts, issued pursuant to the bought-deal financing announced May 23, 2003 were deemed to be converted into 9,500,000 Common Shares of TUSK. Holders of subscription receipts will be mailed the Common Shares issued upon the deemed exercise of the subscription receipts. Such Common Shares are subject to the remainder of a 4 month hold period which commenced May 23, 2003.
At the closing of the Sunfire acquisition, TUSK's line of credit was increased to $65 million. The net proceeds of the issue, together with additional bank indebtedness of approximately $15.9 million, provided the funds for closing of the take-over of Sunfire.
The syndicate of underwriters was led by Orion Securities Inc. (formerly Yorkton Securities Inc.) and included Lightyear Capital Inc., Brant Securities Inc. and Jennings Capital Inc.
Upon the closing of the Sunfire acquisition, the production of TUSK is 5,700 boepd of which more than 70% is natural gas. Through a combination of new gas wells drilled in June at Whitefish, Gage and Thorhild (Sunfire) and new compression being installed at both Blackfoot (Sunfire) and Saddle Lake, TUSK has more than 500 boepd of additional capacity behind pipe. Production is expected to increase to approximately 6,000 boepd prior to the end of July as some of this additional gas capability is placed on-stream.
Net debt at closing is approximately $56 million and approximately 30.2 million common shares are issued and outstanding. Annualized cash flow at closing is approximately $47 million for a debt to cash flow ratio of about 1.19.
TUSK is a rapidly growing junior oil and gas company. During the first quarter of 2003 production averaged 3,292 boepd, cash flow was $8,579,914, cash flow per share was $0.43 and earning per share was $0.18. This represented an increase over the same quarter in the prior year of 92% for production, 316% for cash flow, 231% for cash flow per share and 500% for earnings per share. The acquisition of Sunfire increases production per million shares to approximately 200 boepd, a 20% increase over the 166 boepd per million shares that TUSK produced during the first quarter of 2002. TUSK will drill between 10 and 15 wells during the third quarter, continuing an active drilling program.
FOR FURTHER INFORMATION PLEASE CONTACT:
TUSK Energy Inc. Norman W. Holton President & CEO (403) 264-8875 (403) 264-8861 (FAX) Email: tusk@tusk-energy.com Website: www.tusk-energy.com
