/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR DISSEMINATION IN THE UNITED
STATES/
CALGARY, AB, Oct. 14, 2021 /CNW/ - Cenovus Energy Inc. (TSX:
CVE) (NYSE: CVE) ("Cenovus") and Headwater Exploration Inc. (TSX:
HWX) ("Headwater" or the "Company") have closed the previously
announced bought deal secondary offering (the "Offering") of common
shares of Headwater (the "Common Shares"). The Offering was
completed on a bought deal basis, pursuant to an underwriting
agreement dated effective September 27,
2021 among the Company, Cenovus, Cenovus Marten Hills
Partnership, a wholly-owned subsidiary of Cenovus (the "Selling
Shareholder"), and a syndicate of underwriters led by Peters &
Co. Limited and BMO Nesbitt Burns Inc. and including CIBC World
Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc.,
and TD Securities Inc. (collectively, the "Underwriters").
Pursuant to the Offering, Cenovus, through the Selling
Shareholder, sold a total of 50,000,000 Common Shares
(collectively, the "Offered Shares"), including 5,000,000 Common
Shares sold pursuant to the exercise in full of an over-allotment
option granted to the Underwriters. The Offered Shares were sold at
a price of $4.55 per Offered Share
for total gross proceeds to the Selling Shareholder of $227,500,000. The Company has not and will not
receive any of the proceeds of the Offering. In connection with the
Offering, the Underwriters received a cash commission equal to 4%
of the gross proceeds from the sale of the Offered Shares.
The Selling Shareholder and the Company entered into an investor
agreement dated December 2, 2020 (the
"Investor Agreement") in connection with the issuance of Common
Shares and Common Share purchase warrants (the "Warrants") to the
Selling Shareholder. As a result of the completion of the Offering,
the Investor Agreement automatically terminated in accordance with
its terms. The Investor Agreement provided the Selling Shareholder
with certain contractual rights related to, among other things, the
nomination of directors of the Company. In connection with the
termination of the Investor Agreement, Sarah Walters, who was a nominee of the Selling
Shareholder on the Board of Directors (the "Board") of the Company,
resigned as a director of the Company effective upon completion of
the Offering. Kam Sandhar, who was
also nominated to the Board by the Selling Shareholder pursuant to
the Investor Agreement, is expected to remain on the Board
following the Offering notwithstanding the termination of the
Investor Agreement.
Cenovus sold the Common Shares as part of its plan to reduce its
net debt levels towards its $10
billion interim target and accelerate shareholder returns.
The Common Shares and Warrants were originally issued to the
Selling Shareholder as partial consideration for the acquisition by
Headwater of the Selling Shareholder's assets in the Marten Hills
area of Alberta. Through its
active development plan and early success, Headwater has
accelerated the value generated from the Marten Hills asset and
continues to progress its exploration program. The Offering expands
Headwater's free-trading float and is expected to provide new and
existing shareholders with enhanced trading liquidity.
The Common Shares were offered by way of a short form prospectus
filed by the Company in all provinces of Canada, excluding Quebec. Offered Shares were sold on a private
placement basis in the United
States to "qualified institutional buyers" pursuant to Rule
144A of the Securities Act of 1933 (as amended, the "U.S.
Securities Act"). No securities regulatory authority has either
approved or disapproved of the contents of this news release.
The Common Shares have not been, nor will they be, registered
under the U.S. Securities Act, and may not be offered or sold
in the United States or to, or for
the account or benefit of, U.S. persons absent registration or an
applicable exemption from the registration requirements. This press
release shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the securities in
any state in which such offer, solicitation or sale would be
unlawful.
Additional Early Warning Disclosure
This additional disclosure is provided pursuant to National
Instrument 62-103—The Early Warning System and Related Take-Over
Bid and Insider Reporting Issues, which also requires a report
to be filed by Cenovus with the regulatory authorities in each
jurisdiction in which the Company is a reporting issuer containing
information with respect to the foregoing matters (the "Early
Warning Report").
Prior to the Offering, the Selling Shareholder held 50,000,000
Common Shares, representing approximately 24.7% of the issued and
outstanding Common Shares on an undiluted basis and approximately
26.8% of the issued and outstanding Common Shares on a fully
diluted basis after giving effect to all convertible securities of
the Company, including the exercise of the Warrants. Pursuant to
the Offering, the Selling Shareholder disposed of legal and
beneficial ownership of 50,000,000 Common Shares, being 100% of the
Common Shares held by the Selling Shareholder.
Following completion of the Offering, the Selling Shareholder no
longer holds any Common Shares. Cenovus, through the Selling
Shareholder, continues to own 15,000,000 Warrants exercisable at
$2.00 per Common Share until
December 2, 2023, which have not been
exercised. If the Warrants were exercised in full, Cenovus would
indirectly own, through the Selling Shareholder, an aggregate of
15,000,000 Common Shares, representing approximately 6.9% of the
issued and outstanding Common Shares.
In connection with the Offering, net proceeds of approximately
$218.4 million were paid to, and
received by, the Selling Shareholder, representing the gross
proceeds of the Offering less the fees paid to the Underwriters by
the Selling Shareholder. The Selling Shareholder may from time to
time, depending on market and other conditions, exercise the
Warrants, acquire or dispose of additional Common Shares through
market transactions, public offerings, private agreement or
otherwise.
The Early Warning Report with additional information in respect
of the foregoing matters will be filed and made available on the
System for Electronic Document Analysis and Retrieval (SEDAR) at
sedar.com under Headwater's issuer profile. A copy of such
report may also be obtained by contacting the secretary of
Headwater, on behalf of Cenovus and the Selling Shareholder, at
telephone number (587) 391-3680.
Cenovus's head office is located at 225 – 6th Avenue S.W.,
Calgary, AB T2P 0M5. Headwater's
head office is located at Suite 1200, 500 - 4th Avenue S.W.,
Calgary, Alberta T2P 2V6.
Advisory
Basis of Presentation
Cenovus reports financial
results in Canadian dollars and presents production volumes on a
net to Cenovus before royalties basis, unless otherwise stated.
Cenovus prepares its financial statements in accordance with
International Financial Reporting Standards (IFRS).
Forward-looking Information
This news release contains
certain forward-looking statements and forward-looking information
(collectively referred to as "forward-looking information") within
the meaning of applicable securities legislation, including the
United States Private Securities Litigation Reform Act of 1995,
about Cenovus's and Headwater's current expectations, estimates and
projections about the future, based on certain assumptions made by
Cenovus and Headwater in light of their respective experience and
perception of historical trends. Although Cenovus and Headwater
believe that the expectations represented by such forward-looking
information are reasonable, there can be no assurance that such
expectations will prove to be correct. Readers are cautioned not to
place undue reliance on forward-looking information as actual
results may differ materially from those expressed or implied.
Neither Cenovus nor Headwater undertake any obligation to update or
revise any forward-looking information except as required by
law.
This forward-looking information is identified by words such as
"achieve", "commitment", "continue", "expect", "may", "position"
and "will", or similar expressions and includes suggestions of
future outcomes, and in respect of Cenovus includes statements
about the use of net proceeds from the Offering to reduce net debt
levels and accelerate returns to its shareholders; and the
potential exercise of the Warrants or other acquisitions or
dispositions of Common Shares. In respect of Headwater, the
forward-looking information includes statements about: the intent
to continue to progress its exploration program; the composition of
the Board upon completion of the Offering; and that the Offering
will expand Headwater's free-trading float and is expected to
provide new and existing shareholders with enhanced trading
liquidity.
Developing forward-looking information involves reliance on a
number of assumptions and consideration of certain risks and
uncertainties, some of which are specific to Cenovus or Headwater
and others that apply to the industry generally.
Additional information about risks, assumptions, uncertainties
and other factors that could cause Cenovus's actual results to
differ materially from those expressed or implied by its
forward-looking statements is contained under "Risk Management and
Risk Factors" in Cenovus's Annual Management's Discussion and
Analysis (MD&A) or Form 40-F for the year ended December 31, 2020 and in the updates in the "Risk
Management and Risk Factors" section of Cenovus's MD&A for the
period ended June 30, 2021.
Additional information about risks, assumptions, uncertainties and
other factors that could cause Headwater's actual results to differ
materially from those expressed or implied by its forward-looking
statements is contained under "Risk Factors" in its annual
information form for the year ended December
31, 2020, which is available on SEDAR at sedar.com.
Cenovus Energy Inc.
Cenovus Energy Inc. is an integrated energy company with oil and
natural gas production operations in Canada and the Asia
Pacific region, and upgrading, refining and marketing
operations in Canada and
the United States. The company is
focused on managing its assets in a safe, innovative and
cost-efficient manner, integrating environmental, social and
governance considerations into its business plans. Cenovus common
shares and warrants are listed on the Toronto and New
York stock exchanges, and the company's preferred shares are
listed on the Toronto Stock Exchange. For more information, visit
cenovus.com.
Find Cenovus on Facebook, Twitter, LinkedIn, YouTube and
Instagram.
Headwater Exploration Inc.
Headwater Exploration Inc. is a Canadian publicly traded
resource company engaged in the exploration for and development and
production of petroleum and natural gas in Canada. Headwater currently has high quality
oil production, reserves, and lands in the prolific Clearwater play in the Marten Hills area of
Alberta as well as low decline
natural gas production and reserves in the McCully Field near
Sussex, New Brunswick. Headwater
is focused on providing superior corporate level returns by
focusing on sustainability, asset quality and balance sheet
strength. Headwater common shares are listed on the Toronto Stock
Exchange. For more information, visit headwaterexp.com.
SOURCE Headwater Exploration Inc.