Equal Energy Announces Sale of Northern Oklahoma Assets and Decision to Retain Central Oklahoma Hunton Assets
24 September 2012 - 2:53AM
PR Newswire (Canada)
CALGARY, Alberta, Sept. 24, 2012 /CNW/ - Equal Energy Ltd. ("Equal"
or "the Company") is pleased to announce that, through one of its
wholly owned subsidiaries, it has closed an agreement with Atlas
Resource Partners, L.P. ("Atlas") whereby Equal has sold its
interest in its Northern Oklahoma assets located in Grant, Garfield
and Alfalfa counties for total cash consideration of US$40 million,
effective July 1(st) 2012. The assets sold include production
of 1,400 barrels of oil equivalent per day ("boe/day") (July 2012
average; 73% natural gas, 25% NGL, 2% oil), related infrastructure
and interests in approximately 8,550 acres of Mississippian lands.
Don Klapko, President and Chief Executive Officer said, "The sale
of the Northern Oklahoma asset is a key part of Equal's strategic
direction which will: -- High grade our Oklahoma business by
focusing on the Central Oklahoma area where the liquids content is
higher than in the Northern asset, -- Retain the majority of our
Oklahoma assets providing significant upside for our shareholders
associated with any recovery of natural gas and NGL prices to more
historical levels, -- Best fit the risk-reward profile of a company
our size in an area where we've had greater than 90 percent
drilling success and have a multi-year inventory of drilling
prospects, and -- Further improve the Company's balance sheet. I
believe the decision to sell Northern Oklahoma and retain Central
Oklahoma sets up significant potential benefit for our
shareholders. Equal's remaining Central Oklahoma assets are
very focused with identified drilling inventory backed by a proven
track record of drilling success as well as upside from improving
commodity prices." The Northern Oklahoma sale is at an attractive
valuation as the Company received the equivalent amount of $2,500
per acre for its remaining Mississippian acreage plus approximately
6 times annualized operating cash flows from the Northern Oklahoma
assets based on the first six months of 2012. Equal will use the
proceeds of the sale to reduce amounts outstanding on its credit
facility to approximately $70 million and total debt to
approximately $115 million. The Company's banking syndicate
is reviewing the limit on the $200 million credit facility in light
of this disposition. Equal expects the proceeds of $40
million will materially exceed the borrowing base associated with
the Northern Oklahoma assets. The Central Oklahoma assets
currently produce 7,800 boe/day of natural gas, rich with NGL's
which comprise 48% of total volume. Adjusting for the sale,
Equal's July corporate production was 9,350 boe/d consisting of 45%
natural gas, 42% NGL's and 13% oil compared to 50%, 39% and 11%
before the sale. The Strategic Review is ongoing and management and
the Special Committee of the board of directors continue to make
progress as we turn our focus to Equal's Canadian strategy and
potential transactions that we believe will further benefit our
shareholders. 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 convertible debentures are listed on
the Toronto Stock Exchange under the symbols (EQU, 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 and Oklahoma Equal has compiled a multi-year drilling
inventory for its properties including its new 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 ongoing drilling plans and the likely retention of the
Central Oklahoma assets. 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, such as 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
forward-looking statements contained in this press release are
expressly qualified by this cautionary statement. 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: 1bbl 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. Equal Energy Ltd. CONTACT: Dell ChapmanChief
Financial Officer(403) 538-3580 or (877) 263-0262Don
KlapkoPresident & CEO(403) 536-8373 or (877) 263-0262
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