CALGARY, Feb. 28, 2012 /CNW/ - Marquee Energy Ltd. ("Marquee" or the "Company") (TSX-V: MQL) is pleased to announce that it has entered into an Arrangement Agreement (the "Arrangement Agreement") to acquire a private oil and gas company ("PrivateCo") for total consideration of approximately $23.2 million. The consideration for the Arrangement will be satisfied by the issuance of 10.4 million common shares of Marquee (the "Arrangement"), and includes the assumption of $3.9 million of net debt. PrivateCo will add high netback, focused heavy oil assets in the Lloydminster area of Eastern Alberta in relative proximity to Marquee's existing East Central Alberta core area. The completion of the Arrangement will add a new oil play to Marquee's portfolio.
Transaction Highlights:
Through the completion of the Arrangement, Marquee will acquire current
production of approximately 475 bbl/d (98% oil) of high netback and
high working interest oil production in its early stage of primary
development. Current production is 98% operated and has a high average
working interest of approximately 98%.
The assets of PrivateCo have the following characteristics:
| Current Production: | 475 boe/d (98% crude oil) |
| Proved plus Probable Reserves(1): | 1.7 MMboe |
| Drilling Locations: | >20 |
| Net Undeveloped Land: | ~17,300 acres |
| Operating Netback(2): | $36.50 per boe |
| Assumed Net Debt: | $3.9MM |
(1) Based on the PrivateCo Sproule reserve report with an effective date of September 30, 2011
(2) Based on $90.00/bbl WTI and calculated by subtracting royalties and operating costs from revenues.
Transaction Metrics(3):
Based on the above consideration and net of an undeveloped land and
seismic value of $3.2 million, the transaction metrics are:
| Production: | $42,100 per boe/d |
| Proved plus Probable Reserves: | $11.77 per boe |
| Cashflow Multiple: | 3.3 times |
(3) Based on Marquee's closing share price of $1.85 on February 27, 2012
The Arrangement is accretive to Marquee on key metrics including netback, cash flow, oil production and oil weighting.
Structure and Timing:
The Board of Directors of PrivateCo has approved the Arrangement
Agreement, determined that the Arrangement is in the best interests of
PrivateCo and resolved to recommend that holders of PrivateCo Shares
vote in favour of the Arrangement. Management, directors and certain
shareholders of PrivateCo holding approximately 37% of the issued and
outstanding PrivateCo Shares have confirmed they will support the
Arrangement. Directors and Officers of PrivateCo will be required to
contractually agree to hold the common shares of Marquee received
pursuant to the Arrangement for a minimum of three months following the
effective date of the Arrangement.
The Arrangement Agreement provides for a mutual non-completion fee of $500,000 in the event the Arrangement is not completed in certain circumstances. Completion of the Arrangement is subject to certain conditions and the receipt of all regulatory approvals, including the approval of the TSX Venture Exchange ("TSXV"). Management of PrivateCo intends to obtain the unanimous written consent of PrivateCo shareholders to the Arrangement on or before March 12, 2012, failing which it intends to hold a shareholder meeting to approve the Arrangement prior to April 16, 2012. The Arrangement is expected to be completed following receipt of approval by the PrivateCo shareholders.
Strategic Rationale:
The Arrangement represents a continuation of Marquee's two pronged
growth strategy whereby it continues to grow organically by drilling in
each of its core areas and, when opportunities arise, continue to make
accretive acquisitions that fit the business plan of positioning
Marquee in high impact, emerging crude oil and liquids rich resource
plays. With the completion of the Arrangement, Marquee will have
established a significant undeveloped land base of more than 113,000
net acres in three high impact, emerging oil resource plays at
Michichi, Provost and Coutts, an oil and liquids rich gas play at
Willesden Green and a low cost, high netback oil property at
Lloydminster. To date, Marquee has achieved 100% drilling success,
proven its technical interpretation of the plays and positioned the
Company for an active drilling program in 2012. Marquee intends to
deliver top quartile corporate performance and create value for
shareholders by growing reserves, cash flow and production on a per
share basis.
Operations Update and Increased 2012 Guidance:
Since the business combination with Skywest Energy Corp. in early
December 2011 Marquee has drilled 4 horizontal wells at Michichi and 2
vertical test wells at Provost. Marquee expects to have completed
drilling of a fifth horizontal well at Michichi and the first
horizontal well at Coutts before the end of the first quarter.
Completion and tie-in of all wells is underway and will contribute to
Marquee production exiting the first quarter. The current drilling
inventory has the potential to generate production growth funded
largely from cash flow. Marquee is pleased to provide revised guidance
for 2012 (assuming completion of the Arrangement) as set forth below.
| 2012 Guidance(4) | ||
| Average Production: | 3,100 boe/d (~60% oil & NGLs) | |
| Exit Production: | 3,600 boe/d (~66% oil & NGLs) | |
| Capital Expenditure: | $36 million | |
| Planned 2012 Drills: | 22 net | |
| Cash Flow: | $34-35 million | |
| Cash Flow per basic share: | $0.68 | |
| Pro forma Bank Line: | $52 million | |
| Current Debt: | $28 million | |
| Year-End Net Debt: | $32-33MM |
(4) Based on $90.00/bbl WTI, $2.50/mcf gas price
Not included in the increased guidance for 2012 is a 200 boed low netback, non-operated, sour gas well at Ricinus. This well has been shut-in since late 2011 due to operational issues. It is currently uncertain as to when this well resume regular production. The impact on corporate cash flow for 2012 is minimal due to low gas prices and high operating costs for the well
Financial Advisors
Dundee Securities Ltd. and National Bank Financial Inc. are acting as
financial advisors to Marquee Energy with respect to this transaction.
Sayer Energy Advisors are acting as financial advisor to PrivateCo on
the Arrangement.
Additional Information about Marquee Energy Ltd.
Marquee Energy Ltd. is a publicly traded Calgary-based growth oriented
junior oil and gas company currently focused on high rate of return,
oil and liquids rich gas production in Central and Southern Alberta.
Further information about Marquee Energy Ltd. may be found in its
continuous disclosure documents filed with Canadian securities
regulators at www.sedar.com. Marquee intends to continue to grow the
Company organically in each of its core areas.
Forward Looking Information
Certain information included in this press release constitutes
forward-looking information under applicable securities legislation.
Such forward-looking information is provided for the purpose of providing information about management's current
expectations and plans relating to the future. Readers are cautioned
that reliance on such information may not be appropriate for other
purposes, such as making investment decisions. Forward-looking
information typically contains statements with words such as "anticipate", "believe", "expect", "plan",
"intend", "estimate", "propose", "project" or similar words suggesting
future outcomes or statements regarding an outlook. Forward-looking
information in this press release may include, but is not limited to,
timing for completion of the Arrangement and the anticipated benefits
resulting from the Arrangement; information with respect to:
operational decisions and the timing thereof, development and
exploration plans and the timing thereof; future production levels.
Forward-looking information is based on a number of factors and
assumptions which have been used to develop such information but which
may prove to be incorrect. Although Marquee believes that the
expectations reflected in such forward-looking information is
reasonable, undue reliance should not be placed on forward-looking
information because Marquee cannot give assurance that such
expectations will prove to be correct. In addition to other factors
and assumptions which may be identified in this press release,
assumptions have been made regarding and are implicit in, among other
things: the ability of Marquee to complete the Arrangement and, once
completed, to realize the anticipated benefits of such Arrangement and
other transactions; field production rates and decline rates; the
ability of Marquee to secure adequate product transportation; the
timely receipt of any required regulatory approvals (including Court
and shareholder approvals); the ability to obtain qualified staff,
equipment and services in a timely and cost efficient manner to develop
its business; the ability to operate the properties in a safe,
efficient and effective manner; the ability to obtain financing on
acceptable terms; the ability to replace and expand oil and natural gas
reserves through acquisition, development of exploration; the timing
and costs of pipeline, storage and facility construction and expansion;
future oil and natural gas prices; currency, exchange and interest
rates; the regulatory framework regarding royalties, taxes and
environmental matters; and the ability to successfully market its oil
and natural gas products. Readers are cautioned that the foregoing
list is not exhaustive of all factors and assumptions which have been
used.
Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Marquee and described in the forward-looking information.
The forward-looking information contained in this press release is made as of the date hereof and Marquee does not undertake any obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward looking information contained in this press release is expressly qualified by this cautionary statement.
Additional Advisories
Boes are presented on the basis of one Boe for six Mcf of natural gas.Disclosure provided herein in respect of Boes may be misleading,
particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1
Bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency
at the wellhead.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information:
Marquee Energy Ltd.
Richard Thompson
President & CEO
(403) 384-0000
Roy Evans, C.A.
Vice President, Finance & CFO
(403) 384-0000
or visit the Company's website at www.marquee-energy.com
