TORC Oil closes Saskatchewan asset acquisition
2016-09-01 15:15 NT - News Release
Mr. Brett Herman reports
TORC OIL & GAS ANNOUNCES CLOSING OF STRATEGIC ACQUISITION IN SOUTHEAST SASKATCHEWAN
TORC Oil & Gas Ltd. has closed the previously announced complementary asset acquisition in southeast Saskatchewan. The strategic acquisition includes 1,120 boepd (~95% light oil and liquids) of low decline, high netback, light oil producing assets.
In conjunction with the acquisition, TORC completed an $86 million bought deal public offering and a $25 million private placement with its cornerstone investor, the Canada Pension Plan Investment Board, which both closed on August 16, 2016.
DISCIPLINED BUDGET
With the closing of the acquisition, TORC will maintain the previously announced 2016 capital budget of $90 million. The 2016 planned capital program remains concentrated on the Company's primary core areas in southeast Saskatchewan, focused on both conventional opportunities and the emerging Torquay/Three Forks play and the Cardium play in central Alberta. The capital budget remains approximately 70% weighted to the second half of the year providing the operational flexibility to adjust the current 2016 budget to continue to prudently protect the Company's financial flexibility in a sustained low price environment but also take advantage of potential improvement in crude oil prices. Further cost savings combined with operational efficiencies are expected to continue during 2016 and TORC will incorporate these savings into the budget as they are realized during the year.
TORC's consistent 2016 capital budget demonstrates a measured approach to the current uncertainty in the world oil price environment and reflects a balance between managing long term organic production growth, protecting the Company's strong financial position and sustaining the dividend.
Production Guidance
TORC is pleased to reiterate 2016 exit production of greater than 19,400 boepd (88% light oil and liquids).
OUTLOOK
TORC has built a sustainable growth platform of light oil focused assets. The stability of the high quality, low decline, light oil assets in southeast Saskatchewan and the low risk Cardium development inventory in central Alberta, combined with exposure to the emerging light oil resource play in the Torquay/Three Forks in southeast Saskatchewan, positions TORC to provide value creation through a disciplined long term focused growth strategy with a sustainable dividend.
After giving effect to the acquisitions and the financings, TORC will have the following key operational and financial attributes:
High Netback Production (1) 2016E Average: 18,500 boepd 2016E Exit: 19,400 boepd Total Proved plus Probable Reserves (2) Greater than 96 mmboe (~84% light oil & liquids) Cardium Light Oil Development Inventory Greater than 290 net undrilled locations Southeast Saskatchewan Light Oil Development Inventory Greater than 400 net undrilled locations Sustainability Assumptions (3) Corporate decline ~23% Capital Efficiency ~$22,000/boepd (IP 365) 2016 Capital Program $90 million Annual Dividend (paid monthly) $0.02 per share $43.0 million $26.0 million (net of assumed 40% SDP participation) Net Debt & Bank Debt (4) Less than $300 million Shares Outstanding 179.6 million (basic) Tax Pools Approximately $1.6 billion
Notes: (1) ~88% light oil & NGLs. (2) All reserves information in this press release are gross reserves. The reserve information in the foregoing table is derived (i) inrespect of our reserves as at December 31, 2015, from the independent engineering report effective December 31, 2015 preparedby Sproule & Associates Limited ("Sproule") evaluating the oil, NGL and natural gas reserves attributable to all of our properties (the"TORC Reserve Report"); and (ii) in respect of the reserves associated with the acquired assets (and certain assets acquired pursuantto tuck-in acquisitions completed by TORC in the second quarter of 2016) as at May 31, 2016 based on TORC's internal evaluationprepared by a qualified reserves evaluator in accordance with NI 51-101 and the COGE Handbook. Since the reserves reflected in theabove table were estimated as at different dates, they have been generated based on different assumptions in respect ofcommodity pricing among other metrics. As a result, the presentation of our reserves on a consolidated pro forma basis for theacquisitions would not reflect the actual combined estimated of our reserves and those of the assets acquired at December 31, 2015and should not necessarily be viewed as predictive of our reserves and future production. (3) Refers to full cycle capital efficiency which is the all-in corporate capital budget divided by the IP365 of the associated wells.Corporate decline refers to TORC's estimated oil and gas production decline rate in the normal life cycle of a well. (4) See "Non-GAAP Measures". Represents net debt and bank debt as at June 30, 2016 after giving effect to the financings.
We seek Safe Harbor.
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