CALGARY,
Alberta, Oct. 1, 2012
/PRNewswire/ - Equal Energy Ltd. ("Equal" or "the Company") (TSX:
EQU): (NYSE: EQU) announces that it has entered into a definitive
agreement to sell several of its Canadian properties (the "Asset
Disposition") for a total cash consideration of $17.4 million, subject to customary adjustments
typical of transactions of this type. The Asset Disposition
includes Equal's interests in the Halkirk, Wainwright, Alliance and Clair areas of Alberta. The Asset Disposition excludes
Equal's Cardium assets in the Lochend area and certain royalty
interests. The Asset Disposition is anticipated to be
completed on October 12, 2012 and has
an effective date of July 1,
2012.
The Asset Disposition is the second step in
Equal's ongoing strategic review process. Equal's management
and Special Committee of the Board of Directors continue to review
opportunities with the Company's portfolio which now consists
primarily of the Cardium oil play in the Lochend area of
Alberta, certain royalty interests
in Canada and the liquids rich
natural gas asset in Central
Oklahoma.
The Company has determined that these Asset
Disposition properties provide the least attractive future returns
among its portfolio of properties. Drilling prospects on these
properties cannot economically compete for capital that is limited
annually to cash flow.
The Asset Disposition also includes
substantially all of Equal's non-producing, suspended and abandoned
wells in Alberta, Saskatchewan and BC, such that Equal's
remaining decommissioning liabilities will be reduced
significantly. Equal estimates that its overall decommissioning
provision on its balance sheet will drop by approximately two
thirds when the Asset Disposition is closed.
The assets sold have current production of
approximately 745 boe/day (July average), consisting of 85% medium
and light oil with estimated annualized operating cash flow of
$7.8 million based on the first six
months of 2012. Adjusting for this sale and the previously
announced sale of Northern
Oklahoma, Equal's current corporate production is
approximately 8,300 boe/day consisting of 48% natural gas, 45%
NGL's and 7% oil. Equal will use the proceeds of the sale to
reduce amounts outstanding on its credit facility to approximately
$53 million and total debt including
its convertible debentures to approximately $98 million.
About Equal Energy Ltd.
Equal is an exploration and production oil and gas company based in
Calgary, Alberta, Canada with its
United States operations office
located in Oklahoma City,
Oklahoma. Equal's shares and convertible debentures are
listed on the Toronto Stock Exchange under the symbols (EQU,
EQU.DB.B) and Equal's shares are listed on the New York Stock
Exchange under the symbol (EQU). The portfolio of oil and gas
properties is geographically diversified with producing properties
located in Alberta and
Oklahoma. Equal has compiled
a multi-year drilling inventory for its properties including its
oil opportunity in the Lochend Cardium play of Alberta in addition to its extensive inventory
of drilling locations in the Hunton liquids-rich, natural gas play
in Oklahoma.
Forward-Looking Statements
Certain information in this press release
constitutes forward-looking statements under applicable securities
law including ongoing drilling plans, the timing or certainty of
the closing of the Asset Disposition, the use of proceeds of the
Asset Disposition, the reduction of decommissioning liabilities of
the Company and production estimates following the completion of
the Asset Disposition. Any statements that are contained in
this press release that are not statements of historical fact may
be deemed to be forward-looking statements. Forward-looking
statements are often identified by terms such as "may," "should,"
"anticipate," "expects," "seeks" and similar expressions.
Forward-looking statements necessarily involve
known and unknown risks, such as risks associated with oil and gas
production; marketing and transportation; loss of markets;
volatility of commodity prices; currency and interest rate
fluctuations; imprecision of reserve estimates; environmental
risks; competition; incorrect assessment of the value of
acquisitions; failure to realize the anticipated benefits of
acquisitions or dispositions; inability to access sufficient
capital from internal and external sources; changes in legislation,
including but not limited to income tax, environmental laws and
regulatory matters. Readers are cautioned that the foregoing
list of factors is not exhaustive.
Readers are cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated
forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.
Additional information on these and other
factors that could affect Equal's operations or financial results
are included in Equal's reports on file with Canadian and U.S.
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com), the SEC's website (www.sec.gov,
Equal's website www.equalenergy.ca) or by contacting Equal.
Furthermore, the forward looking statements contained in this news
release are made as of the date of this news release, and Equal
does not undertake any obligation to update publicly or to revise
any of the included forward-looking statements, whether as a result
of new information, future events or otherwise, except as expressly
required by securities law.
Conversion: Natural gas volumes recorded in
thousand cubic feet ("mcf") are converted to barrels of oil
equivalent ("boe") using the ratio of six (6) mcf to one (1) barrel
of oil ("bbl"). Boe's may be misleading, particularly if used
in isolation. A boe conversion ratio of 6 mcf: 1bbl is based
on an energy equivalent conversion method primarily applicable at
the burner tip and does not represent a value equivalent at the
wellhead. All dollar values are in Canadian dollars unless
otherwise stated.
SOURCE Equal Energy Ltd.