Alberta Clipper Energy Inc. (ACN - TSX) Announces Acquisition of a Private Company in its Western Alberta Core Area and 2008 Second Half Capital Budge
Mon Jun 16, 9:13 AM/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION
IN THE UNITED STATES/
ALBERTA CLIPPER MAKES STRATEGIC CORPORATE ACQUISITION
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CALGARY, June 16 /CNW/ - Alberta Clipper Energy Inc. ("Alberta Clipper" or the "Company") advises that it has entered into an Agreement, (the "Arrangement Agreement") with a Private Company pursuant to which Alberta Clipper will acquire all of the issued and outstanding common shares of the Private Company, including a positive working capital balance of $9 million, by way of a Plan of Arrangement under the Business Corporations Act (Alberta) (the "Arrangement") for total consideration of $34.25 million in cash and Alberta Clipper shares (ranging from a minimum of 50% shares to a maximum of 60% shares). After giving consideration for the positive working capital surplus, the net acquisition cost is $25.25 million. The Private Company has agreed to deliver 61 % of their issued and outstanding shares to Alberta Clipper by way of lock-up agreements.
The Private Company assets are strategically located in Alberta Clipper's Western Alberta core area and are comprised of 1.665 mmboe of proved-plus-probable reserves, as estimated by Sproule Associates Limited and approximately 400 boe/d of concentrated, 100% working-interest production (100% natural gas and associated liquids). With the Arrangement, the Company will acquire 8.4 townships of 3D seismic data and 87,200 acres of undeveloped land organized in large contiguous blocks at an average working interest of 58%. Opportunities identified on the Private Company lands exhibit both high impact exploration and significant scalable resource development potential, which should allow the Company to double the Private Company's production by the end of the first quarter of 2009. Of particular note, the strategic acquisition increases Alberta Clipper's exposure to the Montney tight gas play by over 60% from its current 57 net sections to 92 net sections.
The corporate acquisition is expected to close on or before July 31, 2008.
The highlights associated with the Acquisition are set forth below:
1. Purchase Price: C$ 34.25 million
Less: C$ 9.0 million working capital surplus
C$ 5.1 million undeveloped land value
Reserve Acquisition Price C$ 20.15 million
2. Long Life Reserves:
- 1.665 mmboe proved-plus-probable reserves as estimated by
Sproule Associates Limited.
- Acquisition cost of $12.10 per boe proved-plus-probable based on
estimates by Sproule Associates Limited.
- Long Reserve Life Index of approximately 11 years
proved-plus-probable.
3. High Netback Production:
- Approximately 400 boe/d (100% gas)
- $38 netback (at C$10.00/gj AECO)
- Acquisition cost of $50,375 per producing boe.
4. Strong Recycle Ratio:
- 3.1 times recycle ratio based on acquisition cost and
Sproule Associates Limited estimates of vendor's
proved-plus-probable reserves.
5. Net Operating Income Multiple:
- 3.6 times (at C$10.00/gj AECO)
6. Significant Drilling Upside:
- Significant scalable development drilling project at up to
100% working interest
- 4 near-term (H2- 2008) drilling locations (3.5 net) representing
(greater than) 450 boe/d of risked production additions
- Multiple future development drilling and re-completion
opportunities
7. Other Key Attributes
- The Private Company has assembled an attractive land and 3D
seismic position on exploration and development prospects
identified over the past 4 years. These capital intensive
positioning activities will result in significant efficiencies for
Alberta Clipper by both shortening project cycle times and
minimizing the amount of capital that is typically stranded during
the pre-investment phase of most projects.
- Increases Alberta Clipper's exposure to net estimated Montney
resource gas-in-place by 60% from 57 sections to 92 sections.
ALBERTA CLIPPER SECOND HALF 2008 BUDGET
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The Board of Directors of Alberta Clipper Energy Inc. has approved a $55 million capital budget for the second half of 2008, including the Private Company acquisition, bringing the total for the year to $81 million. The program represents a 112% increase over first half capital spending that is estimated at $26 million.
The second half budget projects drilling 19 wells (13 net) and undertaking 15 re-completions in the Company's core operating areas. Approximately $20 million will be spent in Western Alberta ("WAB") and $10 million in Northeast British Columbia ("NEBC"). Over 90% of the capital program will be invested in drilling and associated development activities with 24% of the budget being allocated to light oil targets and 76% to natural gas targets. Of the 19 wells to be drilled, 6 are exploratory and 13 are of a development nature.
The Company is forecasting production to average 3,600 - 3,900 boe/d during the second half of 2008 with the majority of the projected production additions from the second half capital program appearing in the fourth quarter of 2008 and the first quarter of 2009. These additions are expected to take the Company's production to over 4,000 boe/d by the end of the first quarter of 2009.
With the resurgence in natural gas prices and the more attractive royalty regime, Alberta Clipper is accelerating its planned activity on its existing land base in NEBC. As part of this program, Alberta Clipper will expand its development program on its Trutch gas property. This development initiative will include testing previously identified, but as yet unevaluated, gas charged intervals that have the potential to dramatically increase the resource potential of the property. In addition, the Company is licensing its first horizontal well into the Halfway formation where it intends to complete the well using multi-stage fracturing techniques. The Company is also in the process of licensing 5 locations for multi-zone vertical completions using single and multi stage fracturing techniques.
Elsewhere in NEBC, Alberta Clipper will be deepening an existing well bore on one of its 100% owned land blocks to test 2 additional zones - 1 with significant resource potential and the other with considerable exploration potential. Two existing, standing gas zones will also be completed in this well bore in preparation for tie-in this coming winter. The Company will also be completing two further well bores for gas on existing acreage. The Company holds 56,100 net acres of land in NEBC operating 96% of these lands.
In the Sylvan Lake area of WAB, Alberta Clipper will continue to pursue its portfolio of opportunities which range from repeatable Leduc and Pekisko exploration and development projects to potentially scalable Cretaceous development activities. A Leduc development well which is currently drilling is expected to reach total depth late in the second quarter. Additionally, the Company will be testing a larger Leduc pinnacle reef anomaly early in the fourth quarter which exhibits potential for multiple follow-up development locations.
Alberta Clipper will continue to be active in its emerging areas within WAB. The Company plans to continue the development of the discovery that was announced in the first quarter of 2008 with the drilling of 2 additional delineation locations as defined by 3-D seismic data. These locations are expected to spud during the fourth quarter of 2008.
Specific to the second half 2008 activities on the recently acquired Private Company lands, Alberta Clipper plans to drill 3 development wells in the Bigstone area and 1 well at Economy Creek - both within the Company's west central Alberta core area. At Bigstone, all wells possess multi-zone potential and will target the Gething, Cadomin and Montney formations. The Montney formation is productive on and directly adjacent to the Bigstone land block but has yet to be tested for the emerging tight gas play on the majority of the acquired lands. At Economy Creek, drilling will target the Montney formation with the ability to earn an interest in an additional 9.5 gross sections of lands prospective for the Montney gas resource play.
The second half of 2008 will be Alberta Clipper's most active period since inception and in addition to the continued development of the Company's existing asset base, will see the evaluation of several projects that have the potential to facilitate step changes in the reserve and resource potential of the Company.
Alberta Clipper Energy Inc. is a publicly traded Canadian energy company involved in the exploration, development, and production of natural gas and crude oil in western Canada.
This press release contains forward-looking statements. More particularly, this press release contains statements concerning Alberta Clipper's projected annual average and exit rate of production of oil and natural gas for 2008 and 2009 and capital expenditures. The forward-looking statements are based on certain key expectations and assumptions made by Alberta Clipper, including expectations and assumptions concerning prevailing commodity prices and exchange rates, availability and cost of labor and services, the timing of receipt of regulatory approvals, the performance of existing wells, the success obtained in drilling new wells, the performance of new wells and the sufficiency of budgeted capital expenditures in carrying out Alberta Clipper's planned activities.
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Although Alberta Clipper believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Alberta Clipper 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 differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated 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. These risks are set out in more detail in Alberta Clipper's annual information form for the year ended December 31, 2007, which can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and Alberta Clipper 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 so required by applicable securities laws.
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This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable states securities laws.
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responsibility for the adequacy or accuracy of this release. Not for
distribution to U.S. newswire services or for dissemination in the
United States. Any failure to comply with this restriction may constitute
a violation of U.S. securities law.
ContactsKel Johnston
President & C.E.O
Alberta Clipper Energy Inc.
Telephone: (403) 440-3474
Facsimile: (403) 440-3475
Website: www.albertaclipperenergy.com
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