CALGARY, AB, Dec. 14, 2020 /CNW/ - Highwood Oil Company Ltd.,
("HOCL", "Highwood" or the "Company") (TSXV:
HOCL) is pleased to announce that, as a result of its strategic
alternatives review process, it has today entered into a definitive
agreement with an arm's length purchaser, Tamarack Valley Energy
Ltd. ("Tamarack") to divest of the Company's Clearwater assets for cash consideration of
$40.8 million (the
"Divestiture"). The effective date of the Divestiture
is November 1, 2020.
The Divesture is expected to close on December 21, 2020 and remains subject to
customary closing conditions.
GO FORWARD POSITIONING
The Company's Board of Directors has approved the Divestiture
given the tremendous accretion in value of the Clearwater assets since the Company began
amassing a land position in 2017. The Divestiture is
transformative to the Company's balance sheet and removes lender
pressure while positioning Highwood to seek out new growth
opportunities.
Together with the Red Earth disposition, previously announced on
November 13, 2020, the Divestiture
will leave Highwood with a cleaner balance sheet. The Company's
lender has granted a further extension of the maturity of Term
Facility A to December 31, 2020 to
allow for closing of the Divestiture. Proceeds from the divestiture
will satisfy the expiring tranches of the Company's existing credit
facility. Upon closing of the transaction, the Company is expecting
an $8-10 million pro forma operating
facility and will seek to evaluate acquisition opportunities.
Following the conclusion of the Company's strategic alternatives
review process, Highwood emerges with corporate production of 100
bbl/d from producing properties in Western Canada, along with a 100% working,
operated interest in the Wabasca River Pipeline System.
The Wabasca River Pipeline is an open-access system located 450
km of Edmonton and delivers crude
oil onto the Plains Rainbow System. After seeing reduced
activity during the first half of the year attributed to the
commodity price shock experienced in Q1/20, Highwood remains
encouraged by the pace of returning volumes through the pipeline.
Based on current throughput, and historical operating expenses the
asset is expected to generate $4
million of base free cash flow in 2021.
ADVISOR
National Bank Financial Inc. acted as financial advisor to
Highwood with respect to the Divestiture.
Oil and Gas Measures
Readers should see the "Selected Technical Terms" in the
Annual Information Form filed on April 30,
2020 for the definition of certain oil and gas
terms.
Non-GAAP Measures
This press release refers to certain financial measures that
are not determined in accordance with GAAP. Since non-GAAP measures
do not have a standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies, securities regulations require that non- GAAP
measures are clearly defined, qualified and reconciled to their
nearest GAAP measure. Except as otherwise indicated, these non-GAAP
measures are calculated and disclosed on a consistent basis from
period to period. Specific adjusting items may only be relevant in
certain periods.
The intent of non-GAAP measures is to provide additional
useful information with respect to Highwood's operational and
financial performance to investors and analysts though the measures
do not have any standardized meaning under IFRS. The measures
should not, therefore, be considered in isolation or used in
substitute for measures of performance prepared in accordance with
IFRS. Other issuers may calculate these non-GAAP measures
differently.
Other Warnings
The Exchange has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the
contents of this press release.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Exchange)
accepts responsibility for the adequacy or accuracy of this press
release.
This news release contains forward-looking statements
relating to the future operations of the Company and other
statements that are not historical facts. Forward-looking
statements are often identified by terms such as "will", "may",
"should", "anticipate", "expects" and similar expressions. All
statements other than statements of historical fact, included in
this release, including, without limitation, statements regarding
the future plans and objectives of the Company, are forward-looking
statements that involve risks and uncertainties. In particular, and
without limiting the generality of the foregoing, this press
release contains forward-looking statements with respect to: the
closing of the Divestiture; the closing of the Red Earth
disposition and deleveraging the balance sheet of the Company.
There can be no assurance that such statements will prove to be
accurate and actual results and future events could differ
materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from
the Company's expectations include risks detailed from time to time
in the filings made by the Company with securities regulatory
authorities.
The reader is cautioned that assumptions used in the
preparation of any forward-looking information may prove to be
incorrect. Events or circumstances may cause actual results to
differ materially from those predicted, as a result of numerous
known and unknown risks, uncertainties, and other factors, many of
which are beyond the control of the Company and certain of may be
found under the heading "Risk Factors" in the Company's AIF.
The reader is cautioned not to place undue reliance on any
forward-looking information. 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 news
release are expressly qualified by this cautionary statement. The
forward-looking statements contained in this news release are made
as of the date of this news release and the Company will update or
revise publicly any of the included forward-looking statements as
expressly required by Canadian securities law.
SOURCE Highwood Oil Company Ltd.
