CALGARY, ALBERTA--(Marketwired - Oct. 7, 2013) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
FORENT ENERGY LTD. (TSX VENTURE:FEN) ("Forent" or the "Company") is pleased to announce that pursuant to a purchase and sale agreement (the "Agreement") with an independent Canadian oil and gas company (the "Vendor"), Forent has closed an acquisition of low decline, high netback, medium gravity oil (22 to 29 degree API) producing properties (the "Properties") in central Alberta (the "Acquisition") for a total purchase price of $7.5 million. The Properties currently produce approximately 150 barrels of oil equivalent per day ("boe/d") (80 percent oil and liquids). The effective date of the Acquisition is August 1, 2013.
W. Brett Wilson, Chairman of the Board of Directors of Forent, commented on the acquisition, "This acquisition is perfectly in-line with our stated objectives of acquiring light oil focussed assets with development and exploitation potential. Our entire team is to be complimented." The Properties have a long-term average decline rate of less than 10%, providing stable, predictable cash flows. The Acquisition is accretive on a cash flow, production and producing reserves per share basis and the Properties include interests in strategic area infrastructure.
The purchase price consists of $6.7 million in cash and 10 million common shares of Forent. The cash portion has been funded from the Company's available cash resources and from a new $7.0 million bank loan facility. Over $4.0 million of the facility will be undrawn and available to finance future growth opportunities.
Richard Wade, President and CEO, stated, "This acquisition marks a significant step in executing Forent's short term plan outlined in our corporate business plan, provides stable cash flow, and possesses low risk oil development drilling opportunities on the Properties. In addition, having the Vendor take back common shares of Forent as part of the purchase price consideration shows their belief in the value enhancement upside to be exploited from these assets, and the significant additional upside in Forent's current asset base."
With the Acquisition, Forent is well capitalized and positioned to pursue future growth on these Properties. The Company has identified six vertical and two horizontal infill drilling locations on the Properties that have the potential to increase production volumes. Additional value enhancement on the Properties has also been identified through facility optimization and increased water disposal capacity, which is expected to result in additional production volumes.
The Acquisition has the following characteristics:
| Total Purchase Price |
$7,500,000 |
| Estimated Field Production |
150 boe/d (~80 percent oil and liquids) |
| Proved Producing Reserves (1) |
596 Mboe (~80 percent oil and liquids) |
| Total Proved Reserves (1) |
773 Mboe (~82 percent oil and liquids) |
| Proved plus Probable Reserves (1) |
1,230 Mboe (~80 percent oil and liquids) |
| Reserve Life Index (P+P) |
~22 years |
Acquisition Metrics
| Production |
$50,000/boe/d |
| Total Proved Reserves |
$9.70/boe |
| Proved plus Probable Reserves |
$6.10/boe |
Notes:
Company gross reserves before deduction of royalties. Derived from the public company's independent reserve report effective December 31, 2012 prepared by McDaniel & Associates Consultants in accordance with NI 51-101 and the COGE Handbook. It should be noted that the analysis of these properties was conducted within the context of an evaluation of the public company's total corporate independent reserve report. Extraction and use of this analysis outside of this context may not necessarily be appropriate without supplementary due diligence.
Shares of Forent trade on the TSXV under the symbol "FEN".
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
Forward-Looking Statements
This press release contains "forward-looking statements". More particularly, this press release contains statements concerning anticipated: (i) timing and completion of the Acquisition, expectations and assumptions concerning timing of receipt of required regulatory approvals and the satisfaction of other conditions to the completion of the Acquisition, (ii) potential development opportunities associated with the Acquisition, expectations of future drilling and development activities, the performance of existing wells and new wells, (iii) bank loan facilities, (iv) cash flow, and (v) realization of expected benefits of the Acquisition.
The forward-looking statements are based on certain key assumptions made by Forent, including expectations and assumptions concerning the performance of existing wells and success obtained in drilling new wells, anticipated expenses, cash flow and capital expenditures and the application of regulatory and royalty regimes.
Although Forent believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on forward-looking statements because Forent can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could materially differ from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associate with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on the Company has been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and Forent undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required to do so by applicable securities laws.
Barrel of Oil Equivalent Presentation - Natural gas is converted to barrel of oil equivalent ("boe") using six thousand cubic feet ("mcf") of natural gas equal to one barrel of oil unless otherwise stated. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf to one barrel ("bbl") is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe measurements and conversions in this report are derived by converting natural gas to oil in the ratio of six thousand cubic feet to one barrel of oil. Natural gas liquids ("NGL") are reported in barrels directly.
This news release does not constitute an offer to sell or the solicitation of any offer to buy securities of the Company.