PetroBakken Increases Presence in Western Canada
PretroBakken Energy Ltd. has arranged to purchase Calgary-based Result Energy Inc. by acquiring all of the issued and outstanding shares of Result for $0.42 per share. The transaction is valued at approximately $480 million, including Result’s positive working capital of more than $60 million.
Consideration for the transaction is comprised of $200 million cash with the remainder of the consideration to be paid in PetroBakken shares, at a deemed price of $32.25 per share (the five-day weighted average trading price of PetroBakken’s shares as of Jan. 22). The arrangement is expected to close on or about April 1, 2010.
Result had recently acquired Nexstar Energy Ltd., which has arranged a special meeting of the company’s shareholders on Feb. 16 at the offices of Burstall Winger LLP in Calgary to approve the arrangement.
Result management has pursued a focused strategy of growing its exposure to the emerging Cardium light sweet crude oil resource play in Alberta, Canada. After the closing of the arrangement between Result and Nexstar Energy, Result will have amassed an asset base that includes:
- Land position of 150 (over 105 net) sections that are prospective for Cardium light oil.
- A significant horizontal drilling inventory that currently has in excess of 300 identified net potential Cardium locations, which is expected to increase as a result of future drilling.
- More than $120 million of tax pools.
Drilling on Result lands has recently commenced with plans to drill 10 (8.0 net) Cardium horizontal wells in the first quarter of 2010.
The arrangement between Result and Nexstar is expect to close on Feb. 17, subject to customary regulatory and court approvals, approval of Nexstar shareholders and certain other conditions.
The strategic transaction with Result provides PetroBakken with significant additional exposure to the Cardium light oil resource play and complements the company’s strong growth platform centered on high-netback light oil resource plays. The Cardium play shares many similarities to the Bakken light oil resource play located in southeast Saskatchewan.
PetroBakken has been a leader in the development of the Bakken play having pioneered the use of many new technologies focused on maximizing oil recovery while drilling over 500 horizontal, multi stage fractured wells. This vast experience should provide significant benefits in developing the Cardium lands. After PetroBakken’s acquisition of Result and Berens Energy Ltd. (announced Jan. 4 and expected to close Feb. 25), PetroBakken will have access to over 225 gross (150 net) sections of land that are prospective for the Cardium light oil resource play, and over 400 net potential Cardium locations with the expectation that this drilling inventory will increase with further evaluation work of the lands.
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