ATHABASCA OIL SANDS CORP. ANNOUNCES AGREEMENT TO ACQUIRE EXCELSIOR ENERGY LIMITED
14 September 2010 - 12:14AM
PR Newswire (Canada)
CALGARY, Sept. 13 /CNW/ -- /NOT FOR DISTRIBUTION TO UNITED STATES
NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, Sept. 13 /CNW/ - Athabasca Oil Sands Corp. (TSX: ATH)
(AOSC) and Excelsior Energy Limited (Excelsior) (TSXV: ELE) are
pleased to announce they have entered into an arrangement agreement
whereby AOSC will acquire all of the issued and outstanding common
shares ("Excelsior Shares") of Excelsior (the "Transaction") by way
of Plan of Arrangement under the Business Corporations Act
(Alberta). Under the Transaction, Excelsior's shareholders will
receive, for each Excelsior Share held, at the election of the
holder, either (i) $0.36 cash; or (ii) 0.0347 of a common share of
AOSC ("AOSC Shares"). Holders of Excelsior common share purchase
warrants ("Excelsior Warrants") who do not exercise their Excelsior
Warrants prior to closing of the Transaction will exchange their
Excelsior Warrants for warrants to purchase AOSC Shares based on
the same ratio applied to the Excelsior Shares, and expiring on the
second anniversary of the closing of the Transaction. Excelsior
currently has 281,175,755 Excelsior Shares outstanding and
104,165,666 Excelsior Warrants outstanding at exercise prices
ranging from $0.30 to $0.32 per Excelsior Share. The equity value
of the transaction is approximately $144 million on a fully diluted
basis, with an attributed value to Excelsior's oil sands assets and
proprietary technology of approximately $89 million. The Boards of
Directors of both AOSC and Excelsior have unanimously approved the
Transaction. All of the directors and officers of Excelsior, and
certain significant Excelsior security holders beneficially owning
or controlling an aggregate of approximately 19% of the Excelsior
Shares on a non-diluted basis, and 44% of the Excelsior Warrants,
have agreed to vote their securities in favour of the Transaction.
Sveinung Svarte, president and CEO of AOSC says, "The addition of
Excelsior's high quality assets to those of AOSC at Hangingstone is
in line with the strategy we have presented to our investors and
creates a world-class, stand-alone project. The Transaction will
result in a project of critical size and an accelerated development
of the area. It also gives us ownership of their proprietary COGD
(Combustion Overhead Gravity Drainage) technology." Dr. David
Winter, president and CEO of Excelsior commented, "Our asset base,
centred around the Hangingstone property is a great fit with AOSC's
current high quality oil sands assets, which have tremendous upside
potential. We believe this Transaction provides for a more
efficient development of the consolidated Hangingstone project and
allows Excelsior's shareholders to benefit from the upside
potential in a strong, well financed oil sands focused company."
Highlights of the Transaction Through the Transaction, AOSC is
acquiring concentrated, high quality oil sands leases at
Hangingstone and West Surmont, and consolidating AOSC's current
acreage position in the Hangingstone area. The acquisition of
Excelsior is consistent with AOSC's strategy of amassing a suite of
large, critical sized assets which provide optimal long-term
development potential for AOSC. The key attributes of Excelsior
include: - Contingent resources of approximately 183 MMbbls (best
estimate) (1); - Net cash of approximately $25 million (prior to
exercise of any Excelsior stock options or Excelsior Warrants); -
Approximately 26,607 net undeveloped acres of land on two
contiguous blocks in the Hangingstone and West Surmont areas of the
Athabasca oil sands region; - Operatorship, with high working
interests of 75% at Hangingstone and 64.3% at West Surmont; and -
Patent for the Combustion Overhead Gravity Drainage (COGD)
proprietary technology; project approval for a 1,000 bbl/d
experimental pilot is expected in the latter half of 2010 with
subsequent implementation and commissioning in early 2011. (1)
Estimate of contingent resources as per the McDaniel &
Associates report as at December 31, 2009 for Hangingstone and the
McDaniel & Associates report as at December 31, 2008 for West
Surmont. Following the closing of the Transaction, AOSC will have
113,007 net undeveloped acres of land in the Hangingstone area. The
combined Hangingstone acreage allows for both potential independent
development by AOSC, as well as potential joint venture development
opportunities. Details of the Arrangement The Transaction will be
completed pursuant to a plan of arrangement which requires the
approval of at least two-thirds of the votes cast by Excelsior
securityholders at a special meeting to be called to consider the
Transaction along with customary regulatory, court and other
approvals. An Information Circular outlining the Transaction is
expected to be mailed to Excelsior security holders in early
October 2010, with the meeting anticipated to take place in early
November 2010, with closing to follow shortly thereafter. The
arrangement agreement provides that Excelsior will pay AOSC a
non-completion fee of $4 million in certain circumstances. The
arrangement agreement also provides for, among other things,
customary non-solicitation covenants and that AOSC has the right to
match any such superior proposal. Board Approvals The Boards of
Directors of both AOSC and Excelsior have unanimously approved the
Transaction. The Board of Directors of Excelsior has concluded that
the Transaction is in the best interests of Excelsior and its
security holders and has resolved to recommend that Excelsior
security holders vote their Excelsior Shares and Excelsior Warrants
in favour of the Arrangement. Financial Advisors GMP Securities
Limited and Peters & Co. Limited acted as exclusive financial
advisors to AOSC in respect of the Transaction. CIBC World Markets
Inc. and Raymond James Ltd. acted as exclusive financial advisors
to Excelsior in respect of the Transaction. CIBC World Markets Inc.
has provided an opinion to the Board of Directors of Excelsior to
the effect that, as of the date thereof and subject to the
assumptions, limitations and qualifications contained therein, the
consideration to be received by Excelsior Shareholders pursuant to
the Transaction is fair, from a financial point of view, to
Excelsior Shareholders. About AOSC AOSC is a dynamic, young company
formed to develop and produce bitumen in the Athabasca region of
northeastern Alberta. It was incorporated in 2006 with a goal to
use the latest technology to produce bitumen in a sound,
progressive and safe manner. AOSC Shares are listed on the Toronto
Stock Exchange under the trading symbol ATH. AOSC has a current
market capitalization of approximately $4 billion, net working
capital of more than $1.9 billion, as of June 30, 2010. About
Excelsior Excelsior is an early stage, oil sands company, with 58
operated sections on two contiguous blocks in the Hangingstone and
West Surmont areas of the Athabasca Oil Sands Region near Fort
McMurray, Alberta. The properties contain high-quality, bitumen
reservoirs. The company has also developed a proprietary in situ
combustion technology (Combustion Overhead Gravity Drainage or
COGD) which has potential to improve economic and environmental
impact in the development and recovery of heavy oil and bitumen.
Excelsior shares are listed on the TSX Venture Exchange under the
trading symbol ELE. Reader Advisory This News Release contains
forward-looking information that involves various risks,
uncertainties and other factors. All information other than
statements of historical fact is forward-looking information. The
use of any of the words "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "should",
"believe", "predict", "pursue" and "potential" and similar
expressions are intended to identify forward-looking information.
Information in this News Release relating to "reserves" and
"resources" are deemed to be forward-looking information, as they
involve the implied assessment, based on certain estimates and
assumptions, that the reserves and resources described exist in the
quantities predicted or estimated, and that the reserves and
resources described can be profitably produced in the future. The
forward-looking information is not historical fact, but rather is
based on AOSC's and Excelsior's current plans, objectives, goals,
strategies, estimates, assumptions and projections about industry,
business and future financial results. This information involves
known and unknown risks, uncertainties and other factors that may
cause actual results or events to differ materially from those
anticipated in such forward-looking information. No assurance can
be given that these expectations will prove to be correct and such
forward-looking information should not be unduly relied upon. This
information speaks only as of the date of this News Release. In
particular, this News Release contains forward-looking information
pertaining to expectations of management regarding the proposed
Transaction, including the timing of completion of the Transaction
and the terms thereof, operating and financial metrics of the
Transaction, potential benefits resulting from the Transaction;
operational and business plans subsequent to the Transaction; and
the pro-forma effect of the Transaction on AOSC's resources and
undeveloped land position. With respect to such forward-looking
information, assumptions have been made regarding, among other
things: the completion of the Transaction on the terms and on the
schedule outlined above; ability to obtain qualified staff and
equipment in a timely and cost-efficient manner; the regulatory
framework governing royalties, taxes and environmental matters; the
applicability of technologies for the recovery and production of
reserves and resources; capital expenditures; sources of funding;
future debt levels; geological and engineering estimates in respect
of reserves and resources; and the geography of the companies'
operating areas. Actual results could differ materially from those
anticipated in this forward-looking information as a result of,
among other things, the following: the Transaction may not close
when planned or at all or on the terms and conditions set forth
herein; the failure of AOSC and Excelsior to obtain the necessary
security holder, Court, regulatory and other third party approvals
or satisfy the other conditions to proceed with the Transaction;
incorrect assessment of the value of the Transaction; failure to
realize the anticipated benefits of the Transaction; fluctuations
in commodity prices and foreign exchange and interest rates;
general economic, market and business conditions; dependence on
joint venture partners and the terms of joint venture arrangements;
variations in; factors affecting potential profitability;
uncertainties inherent in estimating quantities of reserves and
resources; uncertainties inherent in bitumen recovery processes;
delays in development schedules and potential cost overruns;
increases in operating costs making projects uneconomic; the effect
of diluent and natural gas supply constraints and increases in the
costs thereof; gas over bitumen issues; environmental risks and
hazards and the cost of compliance with environmental regulations;
failure to obtain or retain key personnel; substantial capital
requirements; failure to obtain regulatory approvals or maintain
compliance with regulatory requirements; compliance with,
government laws and regulations and the effect of changes in such
laws and regulations; changes to royalty regimes; political risks;
failure to accurately estimate abandonment and reclamation costs;
risks inherent in oil sands operations, including those related to
exploration, development and production of oil sands reserves and
resources, including the production of oil sands reserves and
resources using in-situ technologies; the potential for management
or third party estimates and assumptions to be inaccurate; long
term reliance on third parties and third party infrastructure;
failure by counterparties; availability of drilling equipment and
access to company assets; aboriginal claims; seasonality; hedging
risks; insurance risks; potential litigation; competition; failure
to meet specific requirements to maintain licenses or leases; risks
arising from future acquisition activities including failure to
realize the anticipated benefits of acquisitions. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect
the operations or financial results of AOSC or Excelsior, as well
as information respecting the significant assumptions relating to
AOSC's and Excelsior's reserves and resources, are included in
reports on file with applicable securities regulatory authorities
and may be accessed through the SEDAR website (www.sedar.com). The
forward-looking information in this News Release is expressly
qualified by this cautionary statement. Neither AOSC nor Excelsior
undertakes any obligation to publicly update or revise any
forward-looking information except as required by applicable
securities laws. This news release does not constitute an offer to
sell or the solicitation of an offer to buy any securities within
the United States. The securities to be offered have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, or any state securities laws, and may not be offered or
sold in the United States absent registration or an applicable
exemption from the registration requirements of such Act or other
laws. Neither the TSX Venture Exchange nor its Regulation Service
Provider (as such term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. Athabasca Oil Sands Corp., Sveinung
Svarte, President and Chief Executive Officer, Tel: (403) 237-9349,
Email: ssvarte@aosc.com; or Heather Douglas, Vice President,
Communications & External Affairs, Tel: (403) 532-7408, Email:
hdouglas@aosc.com; Excelsior Energy Limited, Dr. David Winter,
President and Chief Executive Officer, Tel: (403) 537-1015, Email:
d.winter@excelsior-energy.com; Mary Kennedy, Vice President,
Finance & CFO, (403) 537-1015 (Ext 103), Email:
m.kennedy@excelsior-energy.com
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