- Velvet Energy is offering Iron Bridge shareholders $0.75 in cash per common share, representing an immediate 58% premium
to the $0.475 closing price of Iron Bridge common shares on May 11, 2018, the last trading day prior to the submission of
Velvet’s offer letter to the Iron Bridge board of directors
- Iron Bridge’s recent results underscore ongoing destruction of shareholder value, confirming that the status quo is a
risky and inferior alternative to Velvet’s all-cash premium Offer
- The volume weighted average price (“VWAP”) since Velvet’s announcement is $0.75 per share, and has been trending lower
recently, highlighting the market’s view that a superior alternative does not exist
- Iron Bridge shareholders can tender their shares today by contacting Kingsdale Advisors at 1-866-879-7650 or by e-mail at
contactus@kingsdaleadvisors.com.
CALGARY, Alberta, July 30, 2018 (GLOBE NEWSWIRE) -- Velvet Energy Ltd. (“Velvet” or “We” or “Us”) reminds
shareholders of Iron Bridge Resources Inc. (TSX:IBR) (“Iron Bridge” or the “Company”) that Velvet’s all-cash offer to acquire all
of the issued and outstanding common shares of Iron Bridge for $0.75 in cash per common share (the “Offer”) will expire at 5:00
p.m. (Toronto time) on September 12, 2018.
“As we approach the expiration date of our Offer, publicly available production data confirms that Iron
Bridge is continuing its lacklustre performance, failing to deliver on its production targets and markedly falling short of
industry benchmarks,” said Ken Woolner, President and Chief Executive Officer of Velvet. “These recent results reinforce our view
that the status quo is fraught with uncertainty and risk and that Velvet’s Offer provides Iron Bridge shareholders with superior
value to any potential alternatives offered by the Company.”
RECENT RESULTS CONFIRM THE STATUS QUO IS A RISKY AND INFERIOR ALTERNATIVE
Iron Bridge’s investor communication since Velvet publicly announced the Offer has focused on asking
shareholders to believe in a potential upside beyond the certainty of Velvet’s fully-financed, all-cash offer of $0.75 common
share. Iron Bridge’s claims of its own asset values are more founded in assertion and rhetoric than they are in fact. It’s
important that this promotional messaging is put in context based on facts now available through publicly available data.
Iron Bridge’s press release dated May 17, 2018 referenced the initial performance of two new Montney wells at
Gold Creek, identified as 102/8-21-68-3W6 and 100/8-21-68-3W6, which together were producing oil-equivalent production of 3,142
boe/d (19% oil & 12% natural gas liquids (“NGL”)). Publicly available information from Petrinex for the month of June indicates
that, despite these wells being on production for over 98% of the month, they are materially underperforming these initial results,
with combined production at the significantly reduced rate of approximately 1,900 boe/d.
More importantly, these wells are materially underperforming Iron Bridge’s disclosed type curve for light oil
production by approximately 60% and 80%, respectively, equating to an oil content of only 13% of reported production. As the chart
below shows, the 102/8-21 well produced 166 bbl/d and the 100/8-21 well 81 bbl/d of light oil in June, significantly below Iron
Bridge’s oil type curve of approximately 450 bbl/d in the first 60 days on production. This is important as crude oil revenues
drive the rate of return on these wells.
A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/68821f4b-deca-4ae8-af94-acc1a10d5429
These results are significantly below regional results and underscore that management has yet to demonstrate an
understanding of the subsurface or an ability to optimize drilling and completion techniques.
Iron Bridge's total Montney production for the 30 days in June, filed on Petrinex, was approximately 2,500 boe/d
(15% oil) – half of the ~5,000 boe/d productive capability referenced in Iron Bridge’s May 17, 2018 press release. This significant
variance highlights the credibility gap Iron Bridge management has with the investment community. Since the Petrinex Alberta public
data is based on crude oil and unprocessed natural gas rates, which do not reflect the conversion of a portion of natural gas
production into NGLs, we encourage Iron Bridge management to provide clarity to shareholders on oil, NGL and natural gas sales
volumes for its new wells and for second quarter 2018 given this material underperformance relative to results recently disclosed
by the Company. In light of this underwhelming execution, the risk to Iron Bridge shareholders of allowing management to continue
to pursue a standalone plan is evident and substantial.
Moreover, as with any resource company, the true state of reserves and the ability to extract them goes to the
very heart of valuation. While type curve economics as presented by Iron Bridge management may look compelling, the underlying
value of the Company’s reserves is substantially eroded by virtue of the material underperformance of all of their Montney wells.
We believe these results are likely to result in value to Iron Bridge’s shareholders considerably lower than Velvet’s Offer. Iron
Bridge shareholders must now critically examine management’s claims about their assets and their ability to generate value from
them.
As the chart below shows, Iron Bridge continues to significantly underperform the TSX Capped Energy Index – even
with the Velvet Offer propping up its stock.
A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/df76d822-7121-4cca-aa00-c92fd62db9fb
NO ALTERNATIVE PROPOSALS HAVE EMERGED
These results explain why, despite claims of having term sheets in-hand and potential alternative transactions
emerging, no viable financing or value-enhancing transaction has surfaced in the two months since Velvet announced its intention to
make an offer on May 22, 2018.
Iron Bridge has had ample time to find alternatives but has failed to do so. Velvet wishes to remind Iron Bridge
shareholders that it is within the Company’s control to eliminate false hope and bring forward the bid deadline of the Offer. There
is no reason to further unduly delay shareholder’s ability to accept Velvet’s compelling Offer. The volume-weighted average price
of Iron Bridge’s common shares since the launch of our Offer on May 22, 2018 on all Canadian exchanges remains $0.75, demonstrating
that the market agrees with the valuation of Velvet’s Offer.
TENDER YOUR SHARES TODAY
Consider the benefits, and take the simple steps needed to tender your Iron Bridge common shares to the Offer
now. The Offer expires at 5:00 p.m. (Toronto time) on September 12, 2018. If you have any questions or require assistance, please
contact Kingsdale Advisors, our Depositary and Information Agent, by telephone toll-free at 1-866-879-7650 with North America and
at 1-416-867-2272 outside of North America or by e-mail at contactus@kingsdaleadvisors.com.
Visit velvetenergy.ca/IronBridgeOffer for more information and updates.
ADVISORS
Velvet has retained BMO Capital Markets as its exclusive financial advisor and Bennett Jones LLP as its legal
counsel. Kingsdale Advisors is acting as strategic communications advisor and its Information Agent and Depositary.
INFORMATION AGENT
For additional information, including assistance in depositing Iron Bridge shares to the Offer, Iron Bridge
shareholders should contact Kingsdale, toll-free in North America at 1-866-879-7650 or call collect outside North America at
1-416-867-2272 or by email at contactus@kingsdaleadvisors.com.
ABOUT VELVET
Velvet Energy Ltd. is a privately-held, full-cycle exploration and production company. Focused in the
liquids-rich gas and light oil window of the Deep Basin of Alberta, the Company executes an organic growth business plan, including
early land capture, technical evaluation, exploration and development of internally generated prospects. Headquartered in Calgary,
Velvet has current production of approximately 24,000 boe per day and a focused land position consisting of over one million net
undeveloped acres spanning from its core liquids-rich Ellerslie development in the greater Edson area to early phase Montney light
oil exploration at Gold Creek.
IMPORTANT NOTICE
Certain statements contained in this news release constitute forward-looking information within the meaning of
applicable securities laws. Forward-looking information can be generally identified by the use of words such as “anticipate”,
“continue”, “estimate”, “expect”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar
expressions. Specifically, forward-looking information in this news release includes statements respecting the Offer, including the
benefits, results, effects and timing of any such transaction and the completion thereof, if at all. Forward-looking statements in
this news release describe the expectations of Velvet as of the date hereof. These statements are based on assumptions and involve
known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those
anticipated in such forward-looking statements for a variety of reasons, including without limitation, the ability to obtain
regulatory approvals and meet the other conditions to any possible transaction. Although Velvet believes the expectations reflected
in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that
actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon.
For further information:
Ken Woolner
President and Chief Executive Officer
(403) 781-9134
Chris Theal
Chief Financial Officer
(403) 781-9162
Peter Henry
Vice President, Finance
(403) 781-9133
Media Contact:
Kingsdale Advisors
Ian Robertson, 416-867-2333
Executive Vice President, Communication Strategy
irobertson@kingsdaleadvisors.com
Cell: 647-621-2646