CALGARY, ALBERTA--(Marketwire - March 23,
2009) - NAL Oil & Gas Trust (the "Trust" or "NAL") (TSX:NAE.UN) and
Alberta Clipper Energy Inc. ("Alberta Clipper") (TSX:ACN) jointly
announce that they have entered into an arrangement agreement (the
"Arrangement Agreement") pursuant to which NAL will acquire all of the
issued and outstanding common shares of Alberta Clipper (the
"Transaction") by way of a Plan of Arrangement under the Business
Corporations Act (Alberta) (the "Arrangement"). The total consideration
for the transaction is $115 million which will be paid through the
issuance of approximately 5.7 million trust units of the Trust
representing $37 million at a deemed price of $6.45 per trust unit and
the assumption of an estimated $78 million in Alberta Clipper net debt
at closing Based on an exchange ratio of 0.078875 NAL trust units for
each Alberta Clipper share, the offer represents a price of $0.51 per
common share and a 34% premium over the preceding 20-day volume weighted
average share price. This transaction is expected to close on or about
June 1, 2009.
Concurrent with the execution of the Arrangement Agreement, the
Trust has entered into a letter agreement with its strategic partner,
The Manufacturers Life Insurance Company ("Manulife" or "MLI"), pursuant
to which Manulife has agreed, subject to the satisfaction of certain
conditions, including the preparation of definitive documentation, to
purchase a 50% working interest in all of the assets of Alberta Clipper
for a cash purchase price of approximately $57.5 million adjusted to
approximately $52.5 million to reflect the Trust's disproportionate
interest in the tax pools of Alberta Clipper. It is expected that the
closing of the sale of assets to Manulife will occur immediately
following completion of the acquisition of Alberta Clipper by the Trust.
All of the cash proceeds received from Manulife will be used to pay
down debt assumed by the Trust in this transaction. The letter agreement
between the Trust and Manulife contains provisions whereby Manulife
will indemnify the Trust for Manulife's 50% share of certain potential
corporate liabilities of Alberta Clipper.
A presentation containing corporate maps and transaction highlights is available on NAL's website at: www.nal.ca
ALBERTA CLIPPER OVERVIEW
Alberta Clipper - 100% Trust Interest - 50%
Production (boe/d) - March 2009 3,100 1,550
Production Weighting (%)
Oil / NGL 35 35
Natural Gas 65 65
Proved 5.6 2.8
Probable 3.0 1.5
Proved plus Probable 8.6 4.3
Undeveloped Land ('000) 220 110
Tax Pools ($MM) 268 216
All further references to acquisition values and metrics within this
press release are represented as the Trust's 50% net interest, after
giving effect to the asset sale to Manulife.
KEY ACQUISITION BENEFITS
- Strategic fit within NAL's core areas at Sylvan Lake and west
central Alberta and the addition of new gas focused assets in northeast
British Columbia at Trutch and Beg
- Adds current production of 1,550 boe/d - a 7% increase to NAL's current production
- 4.3 MMboe of proved plus probable reserves - a 6% increase over NAL's year end 2008 reserves
- Strengthens NAL's relatively low risk drilling portfolio
- Adds 110,000 of net undeveloped acres - a 35% increase over NAL's year end 2008 undeveloped land base
- Adds approximately $216 million of tax pools
- Proximity of acquired assets to existing NAL infrastructure
present operational and G&A synergies and facilitate ease of
integration into NAL's asset portfolio
- Partnering with Manulife allows NAL to maintain balance sheet
strength and financial flexibility to complete future transactions.
- The Transaction is accretive to production, reserves and net asset value on a per unit basis
NAL's President and CEO, Mr. Andrew Wiswell commented: "The assets
of Alberta Clipper provide a strong strategic fit with NAL's asset base.
The addition of prospective acreage and production in existing core
areas is consistent with NAL's strategic direction to add assets with
ongoing upside potential as we move toward converting to a
yield-oriented corporation by 2011. Further, we believe asset purchase
and consolidation opportunities will be available in this market. NAL
will continue to evaluate these opportunities and remains well
positioned to execute additional transactions".
Production in NAL's Sylvan Lake region will be increased by
approximately 900 boe/d. Alberta Clipper's assets and infrastructure
will be easily integrated into NAL's existing operations at Sylvan Lake
and provide additional potential locations in the Pekisko, Leduc and
In west central Alberta, NAL will add 350 boe/d of production in the
Kaybob, Bigstone and Kakwa areas with additional gas prospects in the
Gething, Cadomin and Montney zones.
In northeast B.C., the Beg and Trutch areas will add 300 boe/d and
offer long-term gas opportunities with significant upside potential in
the Halfway, Montney and Debolt horizons. During 2008, Alberta Clipper
made considerable investment in facilities and infrastructure to
accommodate future production in the Trutch area. This investment has
paved the way for a significant gas development program with better
capital efficiency and potential by using common pads for horizontal
wells with multi-stage fracs in the Halfway. The Trust expects to
proceed with plans for a six well development program that will be ready
for execution in Q1 2010 should gas prices move above C$6.00 per Mcf.
The Trust's evaluation of Alberta Clipper's reserves effective
December 31, 2008 recognizes 8.6 MMboe (4.3 MMboe net to the Trust) of
proved plus probable reserves, 65% of which are classified as proved.
The acquired reserves are weighted 66% toward natural gas.
Going forward, NAL has identified opportunities for reserves
additions through incremental drilling and increased recovery factors.
Alberta Clipper expects to release its 2008 year-end reserves
evaluation, financial and operating results on March 25, 2009. Alberta
Clipper has retained GLJ Petroleum Consultants Ltd. ("GLJ") to evaluate
its reserves effective December 31, 2008, which may not be consistent
with the reseves evaluation as recognized by NAL.
RESERVE LIFE INDEX (RLI)
NAL's RLI remains essentially flat due to the relative size of the transaction.
NAL Alberta Clipper NAL Pro forma
Proved RLI (years) 6.3 5.0 6.1
Proved and Probable RLI (years) 8.8 7.7 8.6
The Transaction will add 110,000 net undeveloped acres to the Trust, an increase of 35% over NAL's 2008 year end land position.
NAL Alberta Clipper NAL Pro forma
Net Undeveloped Acreage (acres) 310,852 110,000 420,852
The Transaction is accretive to production, reserves and net asset
value on a per trust unit basis in both 2009 and 2010, while the impact
on NAL's cash flow and balance sheet remains neutral to positive due to
the relative size of the acquisition. After adjusting for undeveloped
land valued at $10 million, the acquisition metrics are as follows:
Trailing 12 Month Cash Flow Multiple:
- 2.6 times
- $33,500 per boe/d
- $12.09 per proved plus probable boe
- $18.57 per proved boe
REVISED 2009 GUIDANCE
Based on the expected mid-year completion of the Transaction, NAL is
revising its full year 2009 average daily production guidance by
approximately 700 boe/d, while maintaining its current capital
expenditure program of $95 million for 2009.
NAL continues to implement its commodity risk management strategy,
using a combination of swaps and collars, all with Canadian chartered
banks that are in the Trust's banking syndicate. The Trust intends to
hedge a portion of the net production volumes of Alberta Clipper into
The Trust's hedge portfolio has a mark to market value of approximately $80 million as of March 20, 2009.
NAL will continue to have a relatively strong balance sheet and
unutilized credit capacity of approximately $140 million following the
close of the Transaction.
NAL's upwardly revised guidance reflecting the acquisition for 2009 is summarized as follows:
Average annual production (boe/d) 22,700 - 23,700
Capital expenditures ($MM) 95
The Board of Directors of NAL Energy Inc. ("NAL Energy") has
unanimously approved the Transaction. The Board of Directors of Alberta
Clipper has unanimously approved the Transaction and based, in part, on
the fairness opinion from Alberta Clipper's financial advisor discussed
below, determined that the Transaction is in the best interests of
Alberta Clipper and the holders of its common shares and is fair from a
financial point of view to such holders. Therefore, the Board has
resolved to recommend that such holders vote their shares in favour of
the Transaction. The directors, officers and significant shareholders of
Alberta Clipper, collectively holding approximately 21% of the
outstanding common shares of Alberta Clipper, have entered or agreed to
enter into agreements to vote their securities in favor of the
Arrangement. The Arrangement Agreement provides for a non-completion fee
of $3.6 million to be payable by Alberta Clipper to NAL in certain
Closing of the Transaction is expected to occur on or about June 1,
2009, subject to the satisfaction of certain conditions including
approval of the Transaction by Alberta Clipper's shareholders and the
Court of Queen's Bench of Alberta. A special meeting to vote on the
proposed Arrangement Agreement by Alberta Clipper shareholders is to be
held in May 2009. Upon successful execution of the arrangement
agreement, shareholders of Alberta Clipper will be eligible to receive
the NAL distribution for June 2009 that is expected to be payable on
July 15, 2009.
BMO Capital Markets acted as exclusive financial advisor to NAL with respect to the Transaction.
GMP Securities L.P. acted as financial advisor to Alberta Clipper in
respect of the Transaction and has advised the Board of Directors of
Alberta Clipper that it is of the opinion, as of the date hereof, that
the consideration to be received by Alberta Clipper shareholders
pursuant to the Arrangement is fair, from a financial point of view, to
Alberta Clipper shareholders.
FirstEnergy Capital Corp. acted as strategic advisor to Alberta Clipper.
FORWARD LOOKING STATEMENTS
This press release contains statements that constitute
"forward-looking information" or "forward-looking statements"
(collectively "forward-looking information") within the meaning of
applicable securities legislation. This forward-looking information
includes, among others, statements regarding: the Transaction, the
completion of the Transaction and the outcome of the Transaction,
including regarding transaction values and accretion; the follow-on sale
of assets to Manulife and the completion and outcome of such sale;
estimates of reserves and reserve life index; plans for drilling;
estimates of production; and other expectations, beliefs, plans, goals,
objectives, assumptions, information and statements about possible
future events, conditions, results of operations or performance.
Various assumptions were used in drawing the conclusions or making
the forecasts and projections contained in the forward-looking
information contained in this press release. Forward-looking information
is based on current expectations, estimates and projections that
involve a number of risks, which could cause actual results to vary and
in some instances to differ materially from those anticipated by NAL and
described in the forward-looking information contained in this press
release. Undue reliance should not be placed on forward-looking
information. The material risk factors include, but are not limited to:
failure to receive approval of the Transaction from Alberta Clipper
shareholders, the Court of Queen's Bench of Alberta or applicable
regulatory authorities, failure to realize anticipated synergies,
failure to complete the follow-on sale of assets to Manulife, the
uncertainty of estimates and projections relating to production and
reserves; the possibility that government policies or laws may change or
governmental approvals may be delayed or withheld; changes in tax laws;
changes in royalty rates; and the results of NAL's risk mitigation
strategies; and NAL's ability to implement its business strategy.
Readers are cautioned that the foregoing list of risk factors is not
Forward-looking information is based on the estimates and opinions of NAL's management at the time the information is released.
Throughout this press release, the calculation of barrels of oil
equivalent (boe) is calculated at a conversion rate of six thousand
cubic feet (mcf) of natural gas for one barrel of oil and is based on an
energy equivalence conversion method. Boes may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl
is based on an energy equivalence conversion method primarily
applicable at the burner tip and does not represent a value equivalence
at the wellhead.
NAL Oil & Gas Trust provides investors with a yield-oriented
opportunity to participate in the Canadian Upstream Conventional Oil and
Gas Industry. The Trust generates monthly cash distributions for its
Unitholders by pursuing a strategy of acquiring, developing, producing
and selling crude oil, natural gas and natural gas liquids from pools in
southeastern Saskatchewan, central Alberta, northeastern British
Columbia and Lake Erie, Ontario. Trust units trade on the Toronto Stock
Exchange under the symbol "NAE.UN".
ABOUT ALBERTA CLIPPER
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. The Company's shares trade
on the Toronto Stock Exchange under the symbol "ACN".
NAL Oil & Gas Trust
Mr. Andrew Wiswell
President & CEO
NAL Oil & Gas Trust
Manager, Investor Relations
(403) 294-3620 or Toll Free: 1-888-223-8792
(403) 515-3407 (FAX)
Alberta Clipper Energy Inc.
Mr. Kel Johnston
President & CEO