CALGARY, ALBERTA--(Marketwire - May 31, 2012) - Skope Energy Inc. ("Skope" or the "Company") (TSX:SKL) announced today that it has signed an amendment to its existing credit facility ("Credit Facility") whereby the lender has agreed to extend the revolving period of the Credit Facility to June 30, 2012. The Company has also agreed with the lender to negotiate in good faith a forbearance agreement before June 30, 2012 and to monetize a portion of its hedging program with net proceeds to be applied to outstanding bank debt.
The forbearance agreement will include an obligation for the Company to engage an independent financial advisor acceptable to the lender. Such engagement may include the formulation and recommendation to refinance or market the Company's business or assets. The forbearance agreement will contain other terms including but not limited to ongoing reporting requirements, a prohibition on amending material contracts and changes to the Company's approved operating budget.
Effective May 30, 2012, Skope has monetized the following hedges:
Commodity Hedges Instrument Basis Volume Price Term----------------------------------------------------------------------------Swap AECO 1,500 Gj/d $4.09/Gj Feb 2011 to Jan 2013Swap AECO 2,500 Gj/d $4.27/Gj June 2011 to May 2015Long Gas Put Option AECO 2,500 Gj/d $3.90/Gj Dec 2011 to Nov 2013Short Gas Call Option NYMEX 2,500 mmbtu/d $6.00/mmbtu Jan 2015 to Dec 2015Short Gas Call Option NYMEX 2,500 mmbtu/d $5.65/mmbtu Nov 2015 to Oct 2016Short Gas Call Option NYMEX 2,500 mmbtu/d $5.57/mmbtu Nov 2015 to Oct 2016 Interest Rate Hedges Instrument Notional Receive Pay Term----------------------------------------------------------------------------Interest Rate Swap $13,000,000 1-month BA 2.72% Nov 2010 to Nov 2015Interest Rate Swap $10,000,000 1-month BA 2.16% Dec 2010 to Dec 2013Interest Rate Swap $10,000,000 1-month BA 2.26% Dec 2010 to Dec 2013Interest Rate Swap $10,000,000 1-month BA 2.09% Jan 2011 to Jan 2013
The monetization of the above noted hedges has resulted in net proceeds of approximately $3.1 million. Skope has agreed to apply the net proceeds as a permanent reduction to outstanding bank debt. Following this payment, Skope will have approximately $53.3 million outstanding on the Credit Facility.
Skope's remaining commodity hedges are as follows: Instrument Basis Volume Price Term----------------------------------------------------------------------------Swap AECO 2,500 Gj/d $3.82/Gj Jun 2012 to Oct 2012Swap AECO 2,500 Gj/d $3.90/Gj Jun 2012 to Mar 2013Swap AECO 2,500 Gj/d $3.90/Gj Jun 2012 to Mar 2013
These remaining commodity hedges represent approximately 25% of Skope's anticipated average net production for the next 12 months at a price of approximately $4.10/mcf and have a current mark-to-market value of approximately $3 million.
Since August of 2011, despite the lowest natural gas prices in more than 12 years, Skope has been current on its interest payments and has repaid almost $12 million of bank debt. This speaks to the quality of the asset base and the success of the Company's hedging program.
FORWARD LOOKING STATEMENTS
This news release contains forward looking statements. These statements relate to future events or the Company's future performance. All information and statements contained herein that are not clearly historical in nature constitute forward looking statements, and the words "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "propose", "predict", "potential", "continue", or the negative of these terms or other comparable terminology are generally intended to identify forward looking statements. These statements involve known or unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Undue reliance should not be placed on these forward looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. In particular, this news release contains forward-looking statements relating, but not limited to: the plans to negotiate a forbearance agreement and the terms thereof, the engagement of an independent financial advisor and the scope of the engagement and anticipated production.
Management has included forward-looking information in this press release in order to provide security holders with a more complete perspective on the Company's future operations and such information may not be appropriate for other purposes. These forward-looking statements are based on certain assumptions and are subject to a number of risks including the risk that the Company is unable to enter into a forbearance agreement on the terms expected or at all. Investors are cautioned that such information, although considered reasonable by the Company, may prove to be incorrect.
Skope's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Skope will derive therefrom.
Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statement disclosure contained in this news release is expressly qualified by this cautionary statement.
These forward-looking statements are made as of the date of this news release and the Company 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.
ABOUT SKOPE ENERGY INC.
Skope is in the business of oil and natural gas exploration, development and production in Western Canada with a focus on shallow natural gas. Skope owns an 80% working interest in a package of high quality, long-term, low decline producing shallow gas assets, located in southeast Alberta and southwest Saskatchewan.
Skope's common shares are listed on the Toronto Stock Exchange under the symbol "SKL".