Interesting event today,
Using these metrics for the sale by renegade, would give Longview (which have long life, lower decline rates) a price tag of about 9 a share.
Renegade Petroleum Ltd. Announces Non-Core Asset Disposition and Confirms December 2013 Dividend
Renegade Petroleum Ltd.
CALGARY, ALBERTA--(Marketwired - Dec 12, 2013) - Renegade Petroleum Ltd. (TSX VENTURE:RPL) ("Renegade" or the "Company") is pleased to announce that it has entered into an agreement to sell certain non-core assets for gross proceeds of $32.5 million and is pleased to confirm its December 2013 dividend.
ASSET DISPOSITION
The Company has entered into a definitive agreement to sell, effective December 1, 2013, certain non-core oil and gas assets in southeast Saskatchewan (the "Disposition Assets") for gross proceeds of $32.5 million (the "Disposition").
The Disposition Assets represent approximately 350 barrels of oil and natural gas liquids production per day ("bbls/d"). The Company allocated minimal capital to the Disposition Assets for 2014, resulting in a minor impact to its southeast Saskatchewan development plans going forward. The proceeds from the Disposition will be used to repay a portion of indebtedness drawn under Renegade's credit facility, which will increase financial flexibility and reduce future interest costs. Through preliminary discussions with the Company's lenders, the credit facility is expected to be reduced by approximately $25 million as a result of the borrowing base review post-Disposition.
The Disposition is part of the Company's ongoing strategic review process and will enable Renegade to continue to high grade its current asset base by disposing of mature fields with higher operating costs and limited future drilling opportunities at attractive sale metrics. Further, the Disposition increases corporate netbacks and provides increased operational flexibility with an increased focus on Renegade's core assets.
The Disposition further demonstrates the board and management's continued efforts to increase Renegade's financial flexibility, prudently manage the balance sheet and enhance shareholder value.
The Disposition has the following characteristics:
| Gross Proceeds |
$32.5 million |
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| Current Production |
350 bbl/d(1) |
| Undeveloped Land |
5,142 net acres |
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| Implied Metrics: |
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| Price / Flowing Barrel |
~$92,850/bbl/d |
| Price / Cash Flow(2) |
>5.9x |
| (1) Does not include a minor amount of marginally economic gas production (~50 boe/d) which will have the effect of improving Renegade's pro-forma oil weighting. Relates to oil and natural gas liquids production. |
| (2) Based on corporate netbacks of $44.71/bbl which include general and administrative costs of $2.00/bbl. |