CALGARY, ALBERTA--(Marketwired - April 14, 2015) - Maple Leaf Royalties Corp. (TSX VENTURE:MPL) ("Maple Leaf") is pleased to announce that it has entered into an agreement to acquire existing gross overriding royalty interests in southern Alberta, and that its board of directors has approved a dividend policy.
Asset Acquisition
Maple Leaf has executed purchase and sale agreements with two private oil and gas companies whereby Maple Leaf will acquire a 5-15% sliding scale gross overriding royalty on oil and a 15% gross overriding royalty on natural gas and natural gas liquids on 1,000 contiguous acres in southern Alberta. The royalty land includes the majority of a significant oil pool that has produced over 6 million barrels of medium gravity oil to date and continues to produce with a relatively shallow decline rate. Recent net royalty production from the assets to be acquired is estimated to be 28 barrels of oil per day plus minor solution gas and natural gas liquids. Despite low realized oil prices, cash flow from the royalty interests exceeded $30,000 in each of January and February 2015.
The total purchase price for both of the acquisitions is $3.75 million, which will be funded through a combination of the $3 million cash that the company has on hand and bank debt. The transaction has an effective date of April 1, 2015, and closing is expected to occur on or around May 1, 2015.
Dividend Policy
With the recent completion of the company's third significant acquisition of royalty interests as announced April 1, 2015, Maple Leaf's board of directors has approved the commencement of the payment of dividends through a dividend policy whereby an initial cash dividend will be paid in July 2015. Given recent market volatility, the precise timing and amount of the dividend will be announced at a later date. The dividend policy includes a relatively conservative payout ratio, with the intent of retaining a portion of cash flow within the company in order to help fund its growth by acquisition strategy.
"This latest acquisition is a top-tier royalty interest on a sizeable oil pool with a sub-10% annual decline rate and the potential for further future development," commented Maple Leaf CEO Dan Gundersen. "We view the current market environment as very positive for further accretive acquisitions, and look forward to fully implementing a dividend in early summer."
About Maple Leaf Royalties Corp.
Maple Leaf Royalties Corp. is focused on oil and gas royalty interests in Canada. The company owns royalties on oil and gas production with its current asset base concentrated in west central Alberta and including a mixture of oil, natural gas, and natural gas liquids from numerous producing wells. Royalty interests offer unique investment characteristics including revenue that is directly correlated with oil and gas prices, but with minimal exposure to capital and operating costs and no exposure to abandonment and reclamation costs. Maple Leaf intends to grow and diversify its royalty portfolio through the acquisition of additional royalty interests.
For more information visit: www.mapleleafroyalties.ca
Reader Advisory
Forward-Looking Statements: Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, information with respect to the timing for completion of the acquisition of the Assets and the anticipated benefits resulting from the acquisition described in this press release.
Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Maple Leaf believes that the expectations reflected in such forward-looking information is reasonable, undue reliance should not be placed on forward-looking information because Maple Leaf can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things: field production rates and decline rates; the ability of Maple Leaf to complete the transaction described in this news release and, once completed, to realize the anticipated benefits of the transaction; the timely receipt of any required regulatory approvals; the ability of Maple Leaf to obtain qualified staff in a timely and cost efficient manner to develop its business; future oil and natural gas prices; currency, exchange and interest rates; and the regulatory framework regarding royalties, taxes and environmental matters. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Maple Leaf undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law.
Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Maple Leaf and described in the forward-looking information. The material risk factors affecting Maple Leaf and its business are contained in Maple Leaf's Filing Statement dated October 28, 2014 which is available under Maple Leaf's issuer profile on SEDAR at www.sedar.com.
The reader is cautioned not to place undue reliance on this forward-looking information.
Barrel of Oil Equivalent: Where amounts are expressed on a barrel of oil equivalent ("boe") basis, natural gas volumes have been converted to boe at a ratio of 6,000 cubic feet of natural gas to one barrel of oil equivalent. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. Boe figures may be misleading, particularly if used in isolation.
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