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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| TSXV:PRC | 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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NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED
STATES
PanTerra Resource Corp. ("PanTerra" or the "Corporation") (TSX VENTURE:PRC) is
pleased to announce that it has entered into an arm's length purchase and sale
agreement dated June 11, 2014 (the "Purchase and Sale Agreement") with a public
Canadian oil and gas company to acquire (the "Acquisition") certain natural gas
assets located in the Western Canadian foothills areas of Lynx/Palliser/Minnow
and Findley/Copton/Ojay in Alberta and British Columbia (the "Assets"),
effective as of April 1, 2014, for consideration of $120.0 million in cash,
subject to adjustments.
The Corporation is also pleased to announce that it has entered into an
agreement with a syndicate of underwriters (collectively, the "Underwriters")
co-led by Desjardins Capital Markets and TD Securities Inc. (together, the
"Co-Lead Underwriters") pursuant to which the Underwriters have agreed to
purchase, on a bought-deal private placement basis (the "Offering"), 384,616,000
subscription receipts of PanTerra (the "Subscription Receipts") at a price of
$0.26 per Subscription Receipt for aggregate gross proceeds of approximately
$100.0 million. The net proceeds from the Offering, in combination with existing
cash on PanTerra's balance sheet, will be used by the Corporation to fund the
purchase price of the Acquisition.
In addition, the Underwriters will be entitled to an option (the "Underwriters'
Option"), exercisable in whole or in part prior to the closing of the Offering,
at the sole discretion of the Underwriters, to purchase up to an additional
57,692,400 Subscription Receipts at a price of $0.26 per Subscription Receipt,
for additional gross proceeds of approximately $15.0 million.
TD Securities Inc. has provided PanTerra with a $55 million committed credit
facility to fund future working capital requirements. It is anticipated that the
credit facility will be undrawn on close of the Acquisition, providing the
Corporation with substantial balance sheet flexibility going forward.
The Acquisition
The Assets consist of 36,918 net acres of developed land, 99,390 net acres of
undeveloped land and related producing infrastructure in the foothills region of
Alberta and British Columbia. The Assets are currently producing approximately
6,500 BOE per day (99.8% natural gas). The Assets provide a stable production
base, an attractive decline rate of approximately 20% and a total proved plus
probable Company Gross reserve base of 30.39 MMboe. In addition, PanTerra has
identified approximately 30 net unrisked and unbooked drilling locations based
on producing zones bypassed by previous drilling operations.
Purchase price metrics (in the table below) are presented without attributing
any value to the undeveloped land and seismic. Undeveloped land value is
estimated to be approximately $6 million.
----------------------------------------------------------------------------
Production(1) 6,500 boe/d (99.8% natural gas) $18,462/boe/d
----------------------------------------------------------------------------
2013 Cash flow(2) $31 million 3.9 x
----------------------------------------------------------------------------
12.69 million boe (less than 1%
Reserves (PDP)(3) liquids) $9.46/boe
----------------------------------------------------------------------------
18.67 million boe (less than 1%
Reserves (Proven)(3) liquids) $6.43/boe
----------------------------------------------------------------------------
30.39 million boe (less than 1%
Reserves (P+P)(3) liquids) $3.95/boe
----------------------------------------------------------------------------
Reserve Value
(PDP)(3)(4) $129.2 million 0.93 x
----------------------------------------------------------------------------
Reserve Value
(Proven)(3)(4) $150.2 million 0.80 x
----------------------------------------------------------------------------
Reserve Value
(P+P)(3)(4) $217.1 million 0.55 x
----------------------------------------------------------------------------
(1) Management's estimate of current production as at June 11, 2014.
(2) Actual net operating income for the year period ending December 31,
2013.
(3) As assigned by Deloitte LLP effective March 31, 2014.
(4) Presented on a 10% before tax basis.
----------------------------------------------------------------------------
Reserves Data for the Assets
The reserves data set forth below (the "Reserves Data") is based upon an
evaluation effective March 31, 2014 by Deloitte LLP ("Deloitte"), the
independent qualified reserves evaluator, dated April 30, 2014 (the "Deloitte
Report"). The Reserves Data summarizes the oil, natural gas and NGL reserves
associated with the Assets and the net present values of future net revenue for
such reserves using forecast prices and costs. The crude oil, natural gas and
NGL reserve estimates presented in the Deloitte Report are based on the
guidelines contained in the Canadian Oil and Gas Evaluation Handbook prepared
jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and
the Canadian Institute of Mining, Metallurgy & Petroleum Society (the "COGE
Handbook") and the reserve definitions contained in both National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and
the COGE Handbook. Deloitte was engaged to provide evaluations of proved
reserves and proved plus probable reserves and no attempt was made to evaluate
possible reserves.
The information regarding the Assets set forth herein is in respect of all of
the Assets. All of the reserves associated with the Assets are in Canada and,
specifically, in Alberta and British Columbia.
In certain of the tables set forth below, the columns may not add due to
rounding. In addition, the net present values in the tables set forth below do
not include well abandonment and reclamation costs for existing wells or capital
gas cost allowance as these are determined on a corporate basis. Company Gross
reserves are the Corporation's working interest share of the remaining reserves
before removal of royalties.
SUMMARY OF OIL AND GAS RESERVES
as of March 31, 2014
FORECAST PRICES AND COSTS
Light and
Medium Oil Non Associated Gas
------------------------------------------------
Company Company
Gross Gross Gross Gross
Reserves Category (Mbbl) (Mbbl) (MMcf) (MMcf)
----------------------------------------------------------------------------
PROVED
Developed Producing 0 0 114,995 75,923
Developed Non-Producing 0 0 418 418
Undeveloped 0 0 56,032 35,402
------------------------------------------------
TOTAL PROVED 0 0 171,445 111,743
TOTAL PROBABLE 0 0 109,137 70,078
------------------------------------------------
TOTAL PROVED PLUS PROBABLE 0 0 280,582 181,821
------------------------------------------------
------------------------------------------------
Solution Gas NGL
------------------------------------------------
Company Company
Gross Gross Gross Gross
Reserves Category (MMcf) (MMcf) (Mbbl) (Mbbl)
----------------------------------------------------------------------------
PROVED
Developed Producing 0 0 55 33
Developed Non-Producing 0 0 0 0
Undeveloped 0 0 28 16
------------------------------------------------
TOTAL PROVED 0 0 82 49
TOTAL PROBABLE 0 0 60 38
------------------------------------------------
TOTAL PROVED PLUS PROBABLE 0 0 142 86
------------------------------------------------
------------------------------------------------
SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE
as of March 31, 2014
FORECAST PRICES AND COSTS
Before Income Taxes
Discounted At (%/year)
----------------------------------------------
Unit Value
Before
Income
Tax
Discounted
at 10%/
0 5 10 15 20 year$/
Reserves Category (M$) (M$) (M$) (M$) (M$) BOE
----------------------------------------------------------------------------
PROVED
Developed
Producing 216,211 160,842 129,158 108,817 94,715 10.18
Developed Non-
Producing 344 307 278 254 234 3.97
Undeveloped 62,435 36,348 20,763 10,930 4,397 3.51
----------------------------------------------------------
TOTAL PROVED 278,989 197,497 150,199 120,001 99,346 8.04
TOTAL PROBABLE 216,229 114,394 66,892 41,383 26,264 5.71
----------------------------------------------------------
TOTAL PROVED PLUS
PROBABLE 495,218 311,891 217,091 161,384 125,610 7.14
----------------------------------------------------------
----------------------------------------------------------
Deloitte employed the following pricing, exchange rate and inflation rate
assumptions in estimating the Reserves Data using forecast prices and costs as
of March 31, 2014.
WTI Cushing Natural Gas
Oklahoma Edmonton City at AECO Edmonton Propane
Year ($US/bbl) Gate ($Cdn/bbl) ($Cdn/Mcf) ($Cdn/bbl)
----------------------------------------------------------------------------
2014 (9 mo) 95.00 100.00 4.30 40.00
2015 91.80 96.40 4.30 38.55
2016 91.55 99.50 4.35 54.75
2017 91.25 99.05 4.60 54.50
2018 92.00 99.85 4.85 54.90
2019 93.85 101.85 5.20 56.00
2020 95.70 103.90 5.55 57.15
2021 97.65 105.95 5.90 58.25
2022 99.60 108.10 6.35 59.45
2023 101.60 110.25 6.70 60.65
Thereafter Escalation Rate of 2.0%
Edmonton Butane Edmonton C5+ Exchange Rate Inflation Rate
Year ($Cdn/bbl) ($Cdn/bbl) ($US/$Cdn) (%/yr)
----------------------------------------------------------------------------
2014 (9 mo) 80.00 110.00 0.90 0.0
2015 77.10 106.05 0.90 2.0
2016 79.60 109.45 0.90 2.0
2017 79.25 108.95 0.90 2.0
2018 79.90 109.85 0.90 2.0
2019 81.50 112.05 0.90 2.0
2020 83.10 114.30 0.90 2.0
2021 84.75 116.55 0.90 2.0
2022 86.50 118.90 0.90 2.0
2023 88.20 121.30 0.90 2.0
Thereafter Escalation Rate of 2.0%
Closing Conditions
The Corporation will also seek approval of the Acquisition from the TSX Venture
Exchange (the "TSXV") as the Acquisition is a "fundamental acquisition" pursuant
to the policies of the TSXV. Subject to the satisfaction or waiver of all
conditions set forth in the Purchase and Sale Agreement, it is currently
anticipated that the closing of the Acquisition will occur on July 31, 2014. A
copy of the Purchase and Sale Agreement is filed under the Corporation's SEDAR
profile at www.sedar.com.
The Offering
The Corporation entered into an agreement with the Underwriters pursuant to
which the Underwriters have agreed to purchase for resale to the public, on a
bought-deal private placement basis, 384,616,000 Subscription Receipts at a
price of $0.26 per Subscription Receipt for aggregate gross proceeds of
approximately $100.0 million. The net proceeds from the Offering, in combination
with existing cash on PanTerra's balance sheet, will be used by the Corporation
to fund the purchase price of the Acquisition. The Offering is expected to close
on June 27, 2014.
Each Subscription Receipt will entitle the holder thereof to receive one common
share of the Corporation (a "Common Share"), without any further payment or
action on the part of the holder, upon the Escrow Release Conditions (as defined
below) having been satisfied and the earlier of: (i) four months and a day after
the closing of the Offering; and (ii) upon the issuance of a final passport
decision document evidencing a receipt on behalf of each of the securities
regulatory authorities in each of the provinces of Canada, in which Subscription
Receipts have been sold, pursuant to Multilateral Instrument 11-102-Passport
System (the "Final Receipt") for a final prospectus (the "Prospectus")
qualifying the Common Shares underlying the Subscription Receipts.
In addition, the Underwriters will be entitled to the Underwriters' Option,
exercisable in whole or in part up to 48 hours prior to the closing of the
Offering, at the sole discretion of the Underwriters, to purchase up to an
additional 57,692,400 Subscription Receipts at a price of $0.26 per Subscription
Receipt, for additional gross proceeds of up to $15.0 million.
The Subscription Receipts will be issued pursuant to a subscription receipt
agreement (the "Subscription Receipt Agreement"). Pursuant to the Subscription
Receipt Agreement, the gross proceeds from the Offering will be held in escrow
pending delivery of notice (the "Release Notice") of all conditions to the
completion of the Acquisition (other than the payment of the purchase price)
being met (the "Escrow Release Condition"). If: (i) all conditions to the
completion of the Acquisition (other than the payment of the purchase price) are
not met prior to 5:00 p.m. (Calgary time) on August 15, 2014; (ii) the Purchase
and Sale Agreement is terminated at an earlier time; or (iii) the Corporation
advises the subscription receipt agent and the Co-Lead Underwriters, or
announces to the public, that it does not intend to proceed with the
Acquisition, holders of Subscription Receipts will receive a cash amount equal
to the offering price of the Subscription Receipts and any interest that was
earned thereon during the term of escrow less any applicable withholding taxes.
In addition, the Corporation has agreed to use its commercial best efforts to
file the Prospectus qualifying the Common Shares to be issued upon the exercise
or deemed exercise of the Subscription Receipts in each of the provinces of
Canada in which Subscription Receipts have been sold (the "Qualifying
Jurisdictions") and obtain the Final Receipt within 30 days from the date of
delivery of the Release Notice (the "Qualification Deadline").
The Offering is subject to certain conditions including normal regulatory
approvals and specifically, the approval of the TSXV.
Desjardins Capital Markets acted as financial advisor to PanTerra with respect
to the Acquisition.
About PanTerra
PanTerra is a diversified junior public oil and gas company listed on the TSXV
under the symbol "PRC", with holdings in both conventional and unconventional
projects in Western Canada that have excellent optimization and exploitation
potential. Corporation information can be found at: www.panterraresource.com.
This news release does not constitute an offer to sell or the solicitation of an
offer to buy any securities in the United States, in any province or territory
of Canada or in any other jurisdiction. The securities to be offered have not
been, and will not be, registered under the United States Securities Act of
1933, as amended (the "U.S. Securities Act") or any U.S. state securities laws
and may not be offered or sold in the United States absent registration or an
available exemption from the registration requirements of the U.S. Securities
Act and applicable U.S. state securities laws. There shall be no sale of the
securities in any jurisdiction in which an offer to sell, a solicitation of an
offer to buy or a sale would be unlawful.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM
IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY
FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Abbreviations
The following abbreviations used in this news release have the meanings set
forth below.
AECO Alberta Energy Company interconnect with Nova system, the Canadian
benchmark for natural gas pricing
bbl Barrel
M$ Thousands of dollars
Mbbl Thousand barrels
Mcf Thousand cubic feet
MMcf Million cubic feet
NGL Natural gas liquids
WTI West Texas Intermediate of Cushing, Oklahoma, the benchmark for
crude oil pricing purposes
Caution Respecting Reserves Information
The determination of oil and gas reserves involves the preparation of estimates
that have an inherent degree of associated uncertainty. Categories of proved and
probable reserves have been established to reflect the level of these
uncertainties and to provide an indication of the probability of recovery. The
estimation and classification of reserves requires the application of
professional judgment combined with geological and engineering knowledge to
assess whether or not specific reserves classification criteria have been
satisfied. Knowledge of concepts including uncertainty and risk, probability and
statistics, and deterministic and probabilistic estimation methods is required
to properly use and apply reserves definitions.
It should not be assumed that the estimates of future net revenues presented in
the tables below represent the fair market value of the reserves. There are
numerous uncertainties inherent in estimating quantities of crude oil, NGL and
natural gas reserves and the future cash flows attributed to such reserves. The
reserve and associated cash flow information set forth below are estimates only.
The recovery and reserve estimates of the crude oil, NGL and natural gas
reserves provided herein are estimates only and there is no guarantee that the
estimated reserves will be recovered. Actual crude oil, natural gas and NGL
reserves may be greater than or less than the estimates provided herein. In
general, estimates of economically recoverable crude oil and natural gas
reserves and the future net cash flows therefrom are based upon a number of
variable factors and assumptions, such as historical production from the
properties, production rates, ultimate reserve recovery, timing and amount of
capital expenditures, marketability of crude oil and natural gas, royalty rates,
the assumed effects of regulation by governmental agencies and future operating
costs, all of which may vary materially from actual results. For those reasons,
among others, estimates of the economically recoverable crude oil and natural
gas reserves attributable to any particular group of properties, classification
of such reserves based on risk of recovery and estimates of future net revenues
associated with reserves may vary and such variations may be material. The
actual production, revenues, taxes and development and operating expenditures
with respect to the reserves associated with the Assets may vary from the
information presented herein and such variations could be material.
The recovery and reserve estimates of oil, natural gas and NGL reserves provided
herein are estimates only. Actual reserves may be greater than or less than the
estimates provided herein. The estimated future net revenue from the production
of reserves from the Assets does not represent the fair market value of such
reserves.
Caution Respecting BOE
In this news release, the abbreviation BOE means a barrel of oil equivalent
derived by converting gas to oil in the ratio of 6 Mcf of gas to 1 bbl of oil (6
Mcf:1 bbl). BOEs 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 Mcf:1 bbl, utilizing a conversation ratio on a 6 Mcf
of gas to 1 bbl of oil basis may be misleading as an indication of value.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This press release contains certain statements or disclosures relating to
PanTerra, the Acquisition and the Assets that are based on the expectations of
PanTerra as well as assumptions made by and information currently available to
PanTerra which may constitute forward-looking information under applicable
securities laws. All such statements and disclosures, other than those of
historical fact, which address activities, events, outcomes, results or
developments that PanTerra anticipates or expects may, or will occur in the
future (in whole or in part) should be considered forward-looking information.
In some cases, forward-looking information can be identified by terms such as
"forecast", "future", "may", "will", "expect", "anticipate", "believe",
"potential", "enable", "plan", "continue", "contemplate", "pro-forma", or other
comparable terminology. In particular, this press release makes reference to the
timing and completion of the Offering and the issuance of the Subscription
Receipts, and the issuance of Common Shares issued on the conversion of the
Subscription Receipts, the use of proceeds of the Offering, the expected
completion of the Acquisition, including the ability of the Corporation to
satisfy all necessary conditions to the closing of the Acquisition and the
filing of a short form prospectus to qualify the Common Shares issued on the
conversion of the Subscription Receipts and the focus of future exploration and
development on the Assets. Readers are cautioned that there is no assurance that
the transactions referenced herein will proceed. Certain conditions must be met
before the Acquisition and the Offering can be completed. Such conditions
include the receipt of all necessary regulatory approvals, including the
approval of the TSXV, and completion by PanTerra of the Offering. There is no
assurance that the required approvals will be received and there is therefore no
assurance that the Acquisition or the Offering will be completed in the time
frame anticipated or at all. Many factors could cause the performance or
achievement by PanTerra to be materially different from any future results,
performance or achievements that may be expressed or implied by such
forward-looking statements.
These factors include the failure to obtain the required approvals, including
approval of the TSXV and changes to economic conditions that prevent PanTerra
from completing the Offering. Readers are cautioned that the foregoing list of
factors is not exhaustive. Statements relating to "reserves" or "resources" are
deemed to be forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves and resources
described can be profitably produced in the future. The forward-looking
statements contained in this press release are expressly qualified by this
cautionary statement. The Corporation is not under any duty to update any of the
forward-looking statements after the date of this press release or to conform
such statements to actual results or to changes in the Corporation's
expectations and the Corporation disclaims any intent or obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or results or otherwise, other than as required by applicable
securities laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Tim de Freitas
President and CEO
Phone: 403-261-5900
Fax: 403-261-5902
Carrie McLauchlin
VP Finance & CFO
Phone: 403-261-5900
Fax: 403-261-5902
PanTerra Resource Corp.
800, 717 - 7th Ave. S.W.
Calgary, AB, T2P 0Z3
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