The Disposition Assets included in the Transaction represent all of Angle’s interests below the base of the Cardium and above the base of the Mississippian in the greater Edson area, with the following attributes:
Strategic Rationale
The Company has unbooked inventory of over 275 Cardium light oil locations at Harmattan, Ferrier and Edson and more than 130 unbooked liquids-rich and light oil Mannville locations at Harmattan and Ferrier. Given the continued, repeatable success that Angle has had in the Cardium and the Mannville, the depth of inventory and the relative economics of the these projects, the Disposition Assets (77% natural gas) were identified as non-core to the Company’s focus on increasing the light oil and condensate weighting in its production growth.
Key benefits of the Transaction:
The Company anticipates providing an update on fourth quarter activities and 2013 guidance in January 2013.
The Transaction provides additional balance sheet strength and flexibility to Angle, with the net proceeds from the Transaction to be used to reduce bank indebtedness and redeploy capital to the Company’s higher rate of return Cardium light oil and Mannville light oil and condensate projects.
Consistent with Cardium light oil success that the Company has had at Harmattan and Ferrier, Cardium light oil activity in the Edson area has been significant over the past 6 months, continuing to de-risk Angle’s lands, including 100% Angle lands offsetting such activity. To date Angle has participated in 6 gross/1.4 net producing Cardium light oil horizontal wells with slick water fracture completions with current production of approximately 150 boe/d (81% light oil). An additional 2 gross/0.4 net wells are expected to be on production by year end. Angle has identified 142 gross (75 net) unbooked Cardium light oil locations on its 33 net undeveloped sections (21,120 net undeveloped acres, 64% average working interest) of Cardium lands in the Edson area.
The Company is also retaining its Duvernay rights on 56.8 net sections (36,320 net acres, 100% average working interest) of undeveloped lands in the area, which the Company believes to have significant future value as industry activity in the area continues.
The Transaction has an effective date of December 1, 2012 and is expected to close on or about January 10, 2013, subject to industry standard conditions.
Cormark Securities Inc. acted as financial advisor to Angle in connection with the Transaction, with FirstEnergy Capital Corp. acting as strategic advisor.
Summary
Angle’s business plan is to continue to focus on cash flow per share growth, and drilling the highest rate of return projects yielding light oil, natural gas and NGLs. The Company is also focused on targeting and maintaining the right degree of leverage within its corporate structure and pursuing sustainable growth with high impact to net asset value.
About Angle
Angle Energy Inc. is a Calgary based public oil and gas exploration and development company incorporated in 2004. Angle’s goal is to grow our high quality, focused asset base through a combination of drilling and strategic acquisitions. Angle’s proven and dedicated team of industry specialists are focused on identifying and developing high quality assets in the Western Canadian Sedimentary Basin, with an emphasis in west central Alberta. Common shares of Angle are listed for trading on the Toronto Stock Exchange under the symbol “NGL.”
Basis of Presentation
Production information is commonly reported in units of barrel of oil equivalent (“boe”). For purposes of computing such units, natural gas is converted to equivalent barrels of crude oil using a conversion factor of six thousand cubic feet of gas to one barrel of oil. This conversion ratio of 6:1 is based on an energy equivalent conversion for the individual products, primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Such disclosure of boes may be misleading, particularly if used in isolation.
Forward-Looking Information
Information set forth in this press release may contain forward-looking statements and are made as of December 12, 2012 and based on assumptions as of that date. Forward looking statements contained within this press release include benefits of the Transaction and expected closing in 2013. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Angle’s control, including the timing of closing the Transaction, and the performance of Angle’s assets and operating costs post the Transaction. These elements are subject to all the risks and uncertainties identified by Angle’s MD&A in the most recently completed financial quarter and yearend and most recent Annual Information Form.
Readers are cautioned that the assumptions and factors discussed in this press release are not exhaustive and that the assumptions used in the preparation of such information, including the commodity price assumptions, although considered reasonable at the time of preparation, may prove to be imprecise, and as such, undue reliance should not be placed on forward-looking statements. Angle’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Angle will derive there from. Unless required by law, Angle disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward looking statements are expressly qualified by these cautionary statements.