Take Over? CALGARY, Sept. 4, 2012 /CNW/ - Madalena Ventures Inc. ("Madalena") (TSX-V: MVN), an international upstream oil and gas company and Online Energy Inc. ("Online") (TSX-V: ONL), a domestic oil and gas company with operations in Alberta, are pleased to jointly announce that they have entered into a pre-acquisition agreement (the "Pre-Acquisition Agreement") pursuant to which Madalena will, subject to certain conditions, make an offer to acquire all of the issued and outstanding common shares of Online ("Online Shares") by way of a take-over bid (the "Offer"). Under the terms of the Pre-Acquisition Agreement, Madalena will pay
.35 cash per Online Share for a total purchase price of $20.3 million, which includes the assumption of Online's debt in the amount of approximately $4.0 million excluding transaction costs and severance. Based on the 20 day volume weighted average trading price of the Online Shares on the TSXV ending August 31, 2012, Online's shareholders will receive a 52% premium for each Online Share held. Madalena intends to fund the purchase price from its current working capital.
Online is a junior exploration and production company which currently operates exclusively in Alberta, Canada. Its assets include 145 net sections of land (net 76.4% average working interest) in the Paddle River area of central Alberta across multiple light oil and liquids-rich gas resource plays. Online's resource plays are highlighted by the Ostracod light oil (43 of the 145 net sections) and Nordegg light oil and liquids-rich gas (131 of the 145 net sections) plays, and are complemented by the Rock Creek, Notikewan, Wilrich and Duvernay oil and liquids-rich gas plays. Online has current production of approximately 400 boe/d (37% oil and liquids, 63% natural gas) and anticipates the recently completed Paddle River 1-5-56-7W5M Ostracod horizontal oil well will commence production on or around September 15, 2012 at an initial rate of approximately 400 boe/d (80% oil and liquids).
This strategic acquisition positions Madalena to enter the North American oil and gas sector and obtain a source of cash flow from production along with access to a large inventory of horizontal drilling locations. The acquisition also allows Madalena the ability to re-deploy capital, where required, as international and domestic economic conditions evolve in its core operating areas.