CALGARY, ALBERTA–(Marketwired – Aug. 18, 2016) – Seven Generations Energy Ltd. (TSX:VII) has closed its acquisition of Montney liquids-rich natural gas assets in northwest Alberta from Paramount Resources Ltd.
“This acquisition significantly expands our Kakwa River Project, increasing our proved reserves by about 47 percent and our inventory of high-growth Nest acreage by about 35 percent. At a similar development stage to our original Kakwa lands, these high-quality Montney lands are well delineated. New processing plants and transportation facilities are built with capacity to expand production. Marketing arrangements are in place. We now have more than half a million net Montney acres covering early-life resources that we believe are poised to deliver the strong rate of low-supply-cost growth that will help us reach cash flow sustainability and generate value creation over the long term,” said Chris Law, 7G’s Chief Financial Officer.
Development planning and amalgamation work underway
“We are expanding our development planning to incorporate the added lands covering the prolific Nest reservoir – our highest quality Montney asset. We plan to apply our successful and innovative drilling, completions and production practices to continue operational optimization across our newly expanded Kakwa River Project,” said Glen Nevokshonoff, 7G’s Senior Vice President, Operations.
With the acquisition complete, 7G’s 2016 production guidance is now 120,000 to 125,000 barrels of oil equivalent per day and capital investment is planned at $1.05 billion to $1.1 billion. 7G plans to outline its 2017 outlook and development plan in the fourth quarter of 2016.
Consolidated Montney Nest resource lands can underpin market integration initiatives
“These expanded, low-supply-cost Montney resources strengthen our capacity to increase sales into traditional markets and diversify into new markets. As our long-term transportation capacity on Alliance and TransCanada pipelines increases incrementally towards more than 840 million cubic feet per day in 2018, we have substantial room to grow production, largely to the U.S. Midwest. Beyond that, we have the resource base to underpin new infrastructure developments for our suite of five products: natural gas, condensate, propane, butane and ethane. Our core focus remains on continually advancing innovation to produce liquids-rich natural gas at the toe of the supply cost boot. With one of North America’s lowest supply costs, we are very well situated to evaluate midstream opportunities that serve new customers through the potential development of initiatives such as natural gas-fired electricity plants, liquefied natural gas export facilities, natural gas-to-liquids refining and petrochemicals,” said Marty Proctor, 7G’s President & Chief Operating Officer.
Reserve-based credit facility increases about 30 percent to $1.1 billion
Concurrent with the closing of this acquisition, 7G’s lenders increased the company’s existing reserve-based credit facility by about 30 percent, from $850 million to $1.1 billion. This credit facility, which matures in May 2019, is provided by a syndicate of 12 financial institutions. With this credit facility increase, 7G has available funding, not including projected cash flow, of about $1.7 billion as of June 30, 2016 after the completion of the acquisition.
On July 26, 2016, 7G closed its previously announced bought-deal equity financing raising gross proceeds of $747,666,750 by issuing 30,705,000 subscription receipts at a price of $24.35 each. The proceeds of this financing have now been released from escrow and were used, in part, to fund the Montney asset acquisition, and the balance of the net proceeds are expected to be used to fund the company’s ongoing capital investment program and for general corporate purposes. Now that the Montney asset acquisition has closed, each subscription receipt has been exchanged for one common share of 7G. Holders of the subscription receipts are not required to take any action in order to receive the 7G common shares. The company has been advised by the TSX that the subscription receipts will be delisted by the TSX after the close of trading on August 18, 2016.
Seven Generations funded the Montney asset acquisition with a combination of $475 million in cash (before customary closing adjustments), 33.5 million 7G common shares issued from treasury to Paramount and the assumption of Paramount’s US$450 million (approximately C$584 million) 6.875% notes maturing in 2023.
Seven Generations Energy
Seven Generations is a low-supply-cost, high-growth Canadian natural gas developer generating long-life value from its liquids-rich Kakwa River Project, located about 100 kilometres south of its operations headquarters in Grande Prairie, Alberta. 7G’s corporate headquarters are in Calgary and its shares trade on the TSX under the symbol VII.
Further information about Seven Generations is available on the company’s website: www.7genergy.com.