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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| TSXV:PI | TSX Venture | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
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Mapan Energy Ltd. ("Mapan"), a private company, and Paris Energy Inc. (TSX
VENTURE:PI) ("Paris") are pleased to announce the completion of their previously
announced (July 2, 2014 press release) corporate transaction (the "Corporate
Transaction") and Mapan's acquisition of certain oil and natural gas properties
located in the Deep Basin of West Central Alberta ("DBWC") and Northeastern
British Columbia ("DBN" or "Deep Basin North") (the "Asset Acquisition") for a
purchase price of $132.5 million (before customary closing adjustments), or
$121.7 million after interim closing adjustments. The final closing adjustment
will be determined within three months of closing of the Asset Acquisition.
Pursuant to the Corporate Transaction, Paris acquired all of the issued and
outstanding shares of Mapan in accordance with a plan of arrangement under the
Business Corporations Act (Alberta) on the basis of twelve (12) common shares
("Paris Shares") of Paris for each one (1) common share ("Mapan Share") of
Mapan. In addition, on completion of the Corporate Transaction, management of
Mapan replaced the management of Paris and the board of directors of Paris was
reconstituted and is now comprised of directors nominated by Mapan as further
described below.
The purchase price for the Asset Acquisition was substantially financed with the
net proceeds from a "bought deal" private placement of 63.3 million subscription
receipts of Mapan at a price of $2.00 per subscription receipt, for aggregate
gross proceeds of $126.6 million, that was recently completed through a
syndicate of underwriters led by FirstEnergy Capital Corp. and GMP Securities LP
and including Canaccord Genuity Corp. and Raymond James Ltd. (the "Private
Placement"). In accordance with the terms of the subscription receipts, in
connection with closing of the Asset Acquisition, holders of subscription
receipts received one Mapan Share for each subscription receipt and the proceeds
from the sale of the subscription receipts were released from escrow.
The remainder of the Asset Acquisition purchase price was funded by cash on hand.
Corporate Transaction
The Corporate Transaction was consented to in writing by Paris shareholders
holding in excess of 58.9% of the outstanding Paris Shares. Immediately prior to
completion of the Corporate Transaction, there were 69,943,701 Mapan Shares
(including 63,300,000 Mapan shares issued pursuant to the subscription receipts)
and 17,720,347 Paris Shares outstanding. As a result, Paris issued an aggregate
of 839,324,412 Paris Shares pursuant to the Corporate Transaction at a deemed
price of $0.1667 per share for an aggregate purchase price of approximately
$139.9 million. Accordingly, after giving effect to the Corporate Transaction,
there are approximately 857 million Paris Shares issued and outstanding, of
which former shareholders of Mapan (including former subscription
receiptholders) hold approximately 98% and the previously existing shareholders
of Paris hold approximately 2%.
The management and board of directors of Paris have been reconstituted to
include the following individuals: President, CEO and Director - Dr. Richard A.
Walls, Chief Operating Officer - Michael Boyd, Chief Financial Officer and
Director - Jennifer Dugdale, General Counsel and Director - Ronald Kisic and
Vice President Engineering - Ian Schafer and Directors - Wilfred Gobert and
Kevin Olson. For biographies of Paris' new management and board of directors,
please see Paris' July 2, 2014 press release.
Paris also announces that it intends to hold a special meeting of shareholders
in early or mid-September 2014 for the purpose of obtaining shareholder approval
for a consolidation of the Paris shares on a 1 for 12 basis and a name change of
Paris to "Mapan Energy Ltd.". It is anticipated that post consolidation, Paris
will have approximately 71.4 million shares outstanding. Further details with
respect to the consolidation and name change will be included in the information
circular to be provided to Paris shareholders in connection with the meeting.
Mr. Robert Lamond, former president of Paris and a substantial shareholder of
Paris through Humboldt Capital Corporation, stated that he was extremely pleased
that this transaction will both, enhance the former Paris shareholders equity
value, and that they will now be part of a well-financed larger entity.
In connection with the completion of the Corporate Transaction and the Asset
Acquisition, Mapan, now a subsidiary of Paris, entered into a $55.0 million
credit facility. The credit facility is currently undrawn, leaving the full
$55.0 million available thereunder.
For certain pro forma financial information of Paris after giving effect to the
Corporate Transaction and the Asset Acquisition, please see below under "Pro
Forma Financial Information".
Asset Acquisition
Pursuant to the Asset Acquisition, Mapan acquired production, lands and P&NG
rights in two areas of the Alberta and British Columbia Deep Basin comprised of
203,200 gross acres (162,000 net acres) of which approximately 120,000 net acres
consist of undeveloped lands. Average production from the lands, for the period
January 1 to June 1, 2014, was approximately 7,000 barrels of oil equivalent per
day ("BOED"), of which 90% is natural gas production. Production for the full
year 2014 is expected to average approximately 6,520 BOED.
Deep Basin North
The DBN properties are comprised of 163,700 gross acres (132,200 net acres) with
64 producing wells with average production from January 1 to June 1, 2014 of
approximately 4,760 BOED. The lands and P&NG rights are in an area located along
the border of Alberta and British Columbia (Chinook Ridge, Wapiti, Ojay and
Hiding Creek areas).
All of the current production is gathered into two field compressor facilities
located at Chinook Ridge, Alberta (100% owned, operated) and Hiding Creek, BC
(34.5%, non-operated) and transported through a 60 km pipeline (75% ownership,
with gross capacity of 175 MMcf/d) to the Elmworth Sweet Gas Plant where the gas
is processed under a long term contract. Approximately 83% of the current
production will be operated by Mapan.
Deep Basin West Central Alberta
The DBWC properties are comprised of 39,500 gross acres (29,800 net acres) with
109 producing wells with average production from January 1 to June 1, 2014 of
approximately 2,240 BOED. The lands and P&NG rights are located in four areas:
Cecilia, Bigstone, Fir and Berland River.
Approximately 75% of the production will be operated by Mapan through a 148 km
field gathering system and three separate field compression facilities (35MMcf/d
of capacity). All the pipelines and facilities are operated with 100% ownership
by Mapan. The gas is processed under a firm capacity agreement at the Cecilia
Sweet Gas Plant.
Reserves
Proved Developed Producing ("PDP") and Proved plus Probable Producing Reserves
attributable to the properties acquired pursuant to the Asset Acquisition were
evaluated effective March 31, 2014 by GLJ Petroleum Consultants ("GLJ"), an
independent qualified reserves evaluator, in accordance with the requirements
under National Instrument 51-101 (the "GLJ Report") and are 15.16 million BOE,
of which 83% (12.58 million BOE) are PDP reserves. As further summarized below
and based on the GLJ report, the before tax net present value (discounted at
10%) of the future net revenue attributable to such reserves is approximately
$153.1 million. There is no future capital required to recover the PDP plus
Probable Producing Reserves.
Summary of Oil and Gas Reserves
Effective
Date: March Light & Medium Natural Gas Total Oil
31, 2014 Oil Liquids Natural Gas Equivalent
-------------- -------------- --------------- ---------------
Reserve Gross Net Gross Net Gross Net Gross Net
Category (Mbbl) (Mbbl) (Mbbl) (Mbbl) (MMcf) (MMcf) (Mboe) (Mboe)
----------------------------- -------------- --------------- ---------------
Proved
Developed
Producing 76 65 524 349 71,875 65,008 12,579 11,248
Developed
Non-
Producing - - - - - - - -
Undeveloped - - - - - - - -
-------------- -------------- --------------- ---------------
Total Proved 76 65 524 349 71,875 65,008 12,579 11,248
-------------- -------------- --------------- ---------------
-------------- -------------- --------------- ---------------
Probable
Developed
Producing 30 26 101 67 14,691 13,365 2,579 2,320
Developed
Non-
Producing - - - - - - - -
Undeveloped - - - - - - - -
-------------- -------------- --------------- ---------------
Total Probable 30 26 101 67 14,691 13,365 2,579 2,320
-------------- -------------- --------------- ---------------
Total Proved
plus Probable 106 91 625 415 86,566 78,373 15,158 13,568
-------------- -------------- --------------- ---------------
-------------- -------------- --------------- ---------------
Notes:
(1) Columns may not add due to rounding
(2) "Gross" reserves means the company's working interest (operated and non-
operated) share before deduction of royalties payable to others and without
including any royalty interests of the company
(3) "Net" reserves means the company's working interest (operated and non-
operated) share after deduction of royalty obligations plus the company's
royalty interests in reserves
Summary of Net Present Value of Future Net Revenue
Before Income Tax Discounted at (%/yr)
--------------------------------------------------------
0% 5% 8% 10% 12% 15% 20%
Reserve Category (M$) (M$) (M$) (M$) (M$) (M$) (M$)
------------------- ------- ------- ------- ------- ------- ------- --------
Proved
Developed
Producing 187,043 155,925 141,870 133,897 126,834 117,646 105,235
Developed Non-
Producing - - - - - - -
Undeveloped - - - - - - -
------- ------- ------- ------- ------- ------- --------
Total Proved 187,043 155,925 141,870 133,897 126,834 117,646 105,235
------- ------- ------- ------- ------- ------- --------
------- ------- ------- ------- ------- ------- --------
Probable
Developed
Producing 41,938 27,383 21,977 19,227 16,978 14,310 11,153
Developed Non-
Producing - - - - - - -
Undeveloped - - - - - - -
------- ------- ------- ------- ------- ------- --------
Total Probable 41,938 27,383 21,977 19,227 16,978 14,310 11,153
------- ------- ------- ------- ------- ------- --------
Total Proved plus
Probable 228,982 183,307 163,847 153,124 143,812 131,956 116,387
------- ------- ------- ------- ------- ------- --------
After Income Tax Discounted at (%/yr)
-------------------------------------------------------
0% 5% 8% 10% 12% 15% 20%
Reserve Category (M$) (M$) (M$) (M$) (M$) (M$) (M$)
-------------------- ------- ------- ------- ------- ------- ------- -------
Proved
Developed
Producing 167,446 138,725 125,840 118,558 112,125 103,782 92,562
Developed Non-
Producing - - - - - - -
Undeveloped - - - - - - -
------- ------- ------- ------- ------- ------- -------
Total Proved 167,446 138,725 125,840 118,558 112,125 103,782 92,562
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Probable
Developed
Producing 34,224 21,811 17,299 15,033 13,196 11,039 8,523
Developed Non-
Producing - - - - - - -
Undeveloped - - - - - - -
------- ------- ------- ------- ------- ------- -------
Total Probable 34,224 21,811 17,299 15,033 13,196 11,039 8,523
------- ------- ------- ------- ------- ------- -------
Total Proved plus
Probable 201,671 160,536 143,139 133,591 125,320 114,820 101,085
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Notes:
(1) Columns may not add due to rounding
(2) It should not be assumed that the undiscounted and discounted future
net revenues estimated by GLJ represent the fair market value of the
reserves
GLJ employed the following pricing, exchange rate and inflation rate assumptions
as of April 1, 2014 in the GLJ Report in estimating the net present value of the
future net revenue attributable to the reserves:
Natural Gas Light Crude Oil
----------------------------- -----------------------------
Henry Hub AECO WTI Edmonton
Year
Forecast ($US/MMBtu) ($CAD/MMBtu) ($US/bbl) ($CAD/bbl)
----------------------------- -----------------------------
2014 Q2-Q4 4.40 4.64 97.50 102.78
2015 4.50 4.50 97.50 102.78
2016 4.75 4.75 97.50 105.56
2017 5.00 5.00 97.50 105.56
2018 5.25 5.25 97.50 105.56
2019 5.50 5.50 97.50 105.56
2020 5.63 5.63 98.54 106.37
2021 5.74 5.74 100.51 108.49
2022 5.85 5.85 102.52 110.66
2023 5.97 5.97 104.57 112.87
Thereafter +2%/yr +2%/yr +2%/yr +2%/yr
Pentanes Plus
-------------------
Edmonton Inflation Exchange
Year Rates Rate
Forecast ($CAD/bbl) (%/year) ($US/$CAD)
------------------- ------------------- -------------------
2014 Q2-Q4 113.06 2.0 0.90
2015 113.06 2.0 0.90
2016 112.94 2.0 0.90
2017 112.94 2.0 0.90
2018 112.94 2.0 0.90
2019 112.94 2.0 0.90
2020 113.81 2.0 0.90
2021 116.08 2.0 0.90
2022 118.40 2.0 0.90
2023 120.77 2.0 0.90
Thereafter +2%/yr 2.0 0.90
Pro Forma Financial Information
After giving effect to the Corporate Transaction and the Asset Acquisition, it
is estimated that Paris has aggregate pro forma combined assets of $132.4
million, including current assets of $7.3 million (net of underwriters'
commissions) and resource assets of $125.0 million. As at May 31, 2014, after
giving effect to the Corporate Transaction and the Asset Acquisition, Paris has
nominal debt outstanding and total pro forma liabilities of approximately $4.0
million, which includes an estimated $3.1 million of long term decommissioning
liabilities relating to the assets acquired pursuant to the Asset Acquisition.
Total pro forma shareholders' equity after giving effect to the Corporate
Transaction and Asset Acquisition is approximately $128.4 million, which
includes approximately $143.9 million of share capital and a loss of
approximately ($16.1) million relating to the past operations of Paris. The
foregoing unaudited pro forma consolidated balance sheet information is derived
from the unaudited balance sheets of Paris and Mapan as at May 31, 2014 and
reflects the effects of the Acquisition as at May 31, 2014, including an interim
purchase price adjustment of $10.8 million which was the net sum of revenue
owing to Mapan from the effective date of the Asset Acquisition until closing.
The final purchase price adjustment will be determined within three months of
closing of the Asset Acquisition.
This press release shall not constitute an offer to sell or the solicitation of
an offer to buy any securities nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful. The
securities issued pursuant to the Corporate Transaction or the Private Placement
described herein may not be offered or sold in the United States absent
registration or applicable exemptions from the registration requirements.
ADVISORY: This press release contains forward looking statements. More
particularly, this press release contains forward looking statements concerning
the reserves attributable to the assets acquired pursuant to the Asset
Acquisition and the estimate of the net present value of the future net revenues
attributable thereto, estimated production for 2014 and the shareholders'
meeting expected to be held to approve the name change and consolidation.
Although Paris believes that the expectations reflected in these forward looking
statements are reasonable, undue reliance should not be placed on them because
Paris cannot give assurances that they will prove to be correct. Since forward
looking statements address future events and conditions, by their very nature
they involve inherent risks and uncertainties. Risks include risks associated
with oil and gas exploration, development, exploitation, production, marketing
and transportation, loss of markets and other economic and industry conditions,
volatility of commodity prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other producers, inability to
retain drilling services, incorrect assessment of value of acquisitions and
failure to realize the benefits therefrom, delays resulting from or inability to
obtain required regulatory approvals, the lack of availability of qualified
personnel or management, stock market volatility and ability to access
sufficient capital from internal and external sources and economic or industry
condition changes. Actual results, performance or achievements could differ
materially from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurance can be given that any events
anticipated by the forward-looking statements will transpire or occur, or if any
of them do so, what benefits that Paris and MAPAN will derive therefrom.
Additional information on these and other factors that could affect Paris are
included in reports on file with Canadian securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com). The forward looking
statements contained in this press release are made as of the date hereof and
Paris undertakes no obligation to update publicly or revise any forward looking
statements or information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
Barrels of Oil Equivalent: Disclosure provided herein in respect of barrels of
oil equivalent (BOE) 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. Given that the value ratio based on the current
price of crude oil as compared to natural gas is significantly different from
the energy equivalency of 6:1; utilizing a conversion on a 6:1 basis may be
misleading as an indication of value.
Neither the TSX Venture Exchange nor its Regulation Service 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 PLEASE CONTACT:
Richard A. Walls
President & CEO
403-536-5771
rwalls@mapanenergy.com
Jennifer Dugdale
Chief Financial Officer
403-536-5773
jdugdale@mapanenergy.com
Ron Kisic
VP & General Counsel
403-536-5777
rkisic@mapanenergy.com
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