CALGARY,
Alberta, November 16, 2011
/PRNewswire/ - Equal Energy Ltd. ("Equal" or "the Company") (TSX:
EQU): (NYSE: EQU) has closed the previously announced sale of
non-core assets in Alberta and
British Columbia (the "Initial
Asset Disposition") for proceeds of $40.3
million, adjusted for normal course closing
adjustments. The proceeds from the Initial Asset Disposition
will be used to reduce debt. Specifically, the Company has
issued a notice to redeem on December 15,
2011 its $39.1 million of
outstanding 8.25% Convertible Debentures, due June 30, 2012,
A second asset sale (collectively, with the
Initial Asset Disposition, the "Asset Dispositions") is currently
scheduled to close on November 30,
2011 for cash proceeds of $9.1
million which will be used to reduce outstanding amounts on
the Company's operating credit facility. Debt reduction from
the proceeds of the Asset Dispositions, combined with cash flow in
excess of capital spending during the fourth quarter of 2011, is
projected to reduce total Company debt to approximately
$165 million at December 31, 2011 from $219 million at September
30, 2011.
The Asset Dispositions include properties in
Alberta, Saskatchewan and British Columbia with an October production
average of approximately 2,100 boe/day, of which 51% is natural
gas. Upon closing the transactions, Equal expects to realize
lower operating costs and interest expense resulting in improved
cash netbacks per unit of production on the remainder of its
assets. December 2011
production, after taking into account the effect of the asset sales
is expected to be approximately 9,400 boe per day with average
production for the fourth quarter of 2011 estimated at
approximately 10,000 boe per day.
The Company has established preliminary
operating and capital plans for 2012. Production is estimated
to be between 9,400 and 9,800 boe per day with an even split
between natural gas and liquids. Projected cash flow for 2012
is approximately $65 million.
Commodity price assumptions used for 2012 planning include
US$90/barrel for WTI crude oil,
US$4.00/mmbtu for Nymex natural gas,
C$3.50/GJ for AECO natural gas and a
foreign exchange rate of $0.975
USD/CAD. Natural gas liquids from production in
Oklahoma is expected to receive 53
percent of the US WTI crude oil price. 2012 capital spending
is planned to match cash flow and will be focused in the Company's
three core areas, the Hunton liquids rich natural gas resource play
in Oklahoma and light oil resource
plays at Alliance Viking and Lochend Cardium. The preliminary
2012 plan has not explicitly included development of the
Mississippian play in Oklahoma at
this time. Management is currently assessing a variety of
alternatives to accelerate development of this exciting new
opportunity.
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 debentures are
listed on the Toronto Stock Exchange under the symbols (EQU,
EQU.DB.A, 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,
British Columbia, Saskatchewan and Oklahoma. Production is comprised
of approximately 54 percent crude oil and natural gas liquids and
46 percent natural gas. Equal has compiled a multi-year
drilling inventory for its properties including its oil play
opportunities in the Cardium and Viking in central 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 the use of proceeds from the Asset Dispositions, the
operational and financial impacts of the Asset Disposition, the
anticipated closing date of certain future assets sales and Equal's
ongoing drilling plans and future production estimates. 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, including, without limitation, 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. In
particular, drilling plans,on-production dates and production
continuity are particularly subject to uncertainties and
uncontrollable events such as surface access, rig availability,
equipment availability, weather conditions, changes in geological
interpretation, and other factors. Forward-looking statements
contained in this press release are expressly qualified by this
cautionary statement. Financial outlook information contained
in this press release about prospective cash flows is based on
assumptions about future events, including economic conditions and
proposed courses of action, based on management's assessment of the
relevant information currently available. Readers are
cautioned that any such financial outlook information contained
herein should not be used for purposes other than for which it is
disclosed herein.
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:1 bbl
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.
SOURCE Equal Energy Ltd.