December 12, 2012 16:55 ET
Angle Energy Inc. Announces Divestiture of Natural Gas-Weighted Edson Assets for $74 Million
CALGARY, ALBERTA--(Marketwire - Dec. 12, 2012) - Angle Energy Inc. ("Angle" or the "Company") (TSX:NGL) is pleased to announce that it has signed a definitive purchase and sale agreement (the "Agreement") for the divestiture of certain non-core natural gas-weighted assets in the Edson area of Alberta (the "Disposition Assets") for gross proceeds of $74 million, subject to certain closing adjustments and costs (the "Transaction").
The Disposition Assets included in the Transaction represent all of Angle's interests below the base of the Cardium and above the base of the Mississippian in the greater Edson area, with the following attributes:
Current daily production of approximately 2,450 boe/d (77% natural gas)
Reserves as at December 31, 2011 of 10.0 MMboe proven and 19.6 MMboe proved plus probable (81% natural gas) as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ"). Future development capital of $155 million was attributed to the GLJ proved plus probable reserve assignment related to the Disposition Assets at December 31, 2011.
Strategic Rationale
The Company has unbooked inventory of over 275 Cardium light oil locations at Harmattan, Ferrier and Edson and more than 130 unbooked liquids-rich and light oil Mannville locations at Harmattan and Ferrier. Given the continued, repeatable success that Angle has had in the Cardium and the Mannville, the depth of inventory and the relative economics of the these projects, the Disposition Assets (77% natural gas) were identified as non-core to the Company's focus on increasing the light oil and condensate weighting in its production growth.
Key benefits of the Transaction:
Proforma the effective date of the Transaction, Angle will reduce total leverage by 30%, with bank debt and working capital of approximately $111 million, and the outstanding $60 million convertible debenture. The bank line has been re determined post-closing at $215 million, providing additional liquidity of $104 million.
Proforma the effective date of the transaction, debt to annualized forward cash flow ratio is 1.8 times.
A 10% reduction in Angle's already low operating cost structure to $5.31/boe as compared to the Company's Q3 2012 average operating cost of $5.93/boe.
Reduces the future development capital requirements of the Company by 32% - the Disposition Assets had $155 million of future development capital associated with the proved plus probable reserves assigned by GLJ as at December 31, 2011.
The Company anticipates providing an update on fourth quarter activities and 2013 guidance in January 2013.
The Transaction provides additional balance sheet strength and flexibility to Angle, with the net proceeds from the Transaction to be used to reduce bank indebtedness and redeploy capital to the Company's higher rate of return Cardium light oil and Mannville light oil and condensate projects.
Consistent with Cardium light oil success that the Company has had at Harmattan and Ferrier, Cardium light oil activity in the Edson area has been significant over the past 6 months, continuing to de-risk Angle's lands, including 100% Angle lands offsetting such activity. To date Angle has participated in 6 gross/1.4 net producing Cardium light oil horizontal wells with slick water fracture completions with current production of approximately 150 boe/d (81% light oil). An additional 2 gross/0.4 net wells are expected to be on production by year end. Angle has identified 142 gross (75 net) unbooked Cardium light oil locations on its 33 net undeveloped sections (21,120 net undeveloped acres, 64% average working interest) of Cardium lands in the Edson area.
The Company is also retaining its Duvernay rights on 56.8 net sections (36,320 net acres, 100% average working interest) of undeveloped lands in the area, which the Company believes to have significant future value as industry activity in the area continues.
The Transaction has an effective date of December 1, 2012 and is expected to close on or about January 10, 2013, subject to industry standard conditions.
Cormark Securities Inc. acted as financial advisor to Angle in connection with the Transaction, with FirstEnergy Capital Corp. acting as strategic advisor.
Summary
Angle's business plan is to continue to focus on cash flow per share growth, and drilling the highest rate of return projects yielding light oil, natural gas and NGLs. The Company is also focused on targeting and maintaining the right degree of leverage within its corporate structure and pursuing sustainable growth with high impact to net asset value.