CALGARY,
Alberta, Nov. 2, 2012 /CNW/ -
Equal Energy Ltd. ("Equal" or "the Company") (TSX: EQU) (NYSE: EQU)
is pleased to announce that it has closed an agreement with another
Canadian energy company whereby Equal has sold its Lochend Cardium
assets for cash consideration of $62
million, effective October
1st 2012. The assets sold include current
production of approximately 525 boe/d (93% light oil) based on the
most recent 30 day average, related infrastructure and undeveloped
land.
Equal will use the proceeds from the Lochend
sale to fully repay the amount outstanding on its credit facility
and estimates that it will have approximately $10 million in cash after the repayment.
Net debt will total approximately $35
million including outstanding convertible debentures.
In light of this disposition the Company's banking syndicate is
reviewing the limit on the Company's credit facility. Equal
estimates that the credit facility will be in the range of
$110 million secured against the
borrowing base of the Central
Oklahoma assets.
Equal's last remaining Canadian asset is
represented by a royalty stream of payments from producing wells in
Western Canada. The Company
will continue to operate its Central
Oklahoma assets consisting of approximately 7,800 boe/d of
liquids rich natural gas where strong historical drilling success
has been experienced. There is an established inventory of
future drilling locations and a staff of experienced people in
Oklahoma managing these
assets. Management believes that in addition to successful
drilling, there is significant additional upside from natural gas
and NGL commodity price recovery.
The Company is still conducting its Strategic
Review process and is evaluating proposals for the sale of the
remaining royalty assets which, if sold, will represent an exit
from all Canadian operations. Equal's Special Committee of
the Board of Directors and management are moving to the final step
in the Strategic Review Process to finalize the go forward strategy
for the Company. A Canadian Trust, US Master Limited Partnership
and an Exploration and Production Corporation are all being
considered. The make-up of the Board of Directors and Executive
Management team as well as an overall go forward manpower plan will
follow the Company structure decision. Equal expects to conclude
the Strategic Review process shortly after the conclusion of the
evaluation of the royalty proposals, likely by late November 2012. Equal is being advised on
the strategic review process by Scotiabank. Desjardins Capital
Markets is also advising Equal on the strategic review process
relating to Equal's Canadian assets.
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 oil and gas
properties are Oklahoma.
Equal has compiled a multi-year drilling inventory for its Hunton
liquids rich natural gas property in Oklahoma.
Forward-Looking Statements
Certain information in this press release
constitutes forward-looking statements under applicable securities
law including the timing or uncertainty of the sale of Equal's
royalty interests, the repayment of the bank facility, the outcome
of the lenders review of the limit of the credit facility and the
timing and certainty of any further action in relation to the
Company's strategic review process. 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
closing the Royalties sale, repayment of the bank credit facility,
the future amount of the bank credit facility, 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
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.
SOURCE Equal Energy Ltd.