Alexander Energy Ltd. (TSX VENTURE:ALX) (“Alexander” or the “Corporation“) is pleased to announce that it has entered into a definitive reorganization and investment agreement (the “Agreement“) with Richard McHardy, Albert Stark, Ed Wong, Fotis Kalantzis, Thomas Boreen and Michelle Wiggins, (the “Initial Investor Group“) which provides for: (i) a non-brokered private placement of up to an aggregate of approximately $26.5 million (the “Private Placement“); (ii) the appointment of a new management team and board of directors (collectively, the “New Management Team“); and (iii) a rights offering (the “Rights Offering“) to current holders of common shares (“Common Shares“) of Alexander (collectively, the “Transaction“). Completion of the Transaction is subject to customary closing conditions, including the approval of the TSX Venture Exchange (the “TSXV“). Upon completion of the Transaction, it is anticipated that the shareholders of Alexander will be asked to approve, at a special meeting called for such purpose, a change of the Corporation’s name to “Spartan Energy Corp.”
The New Management Team will be led by Richard McHardy as President & Chief Executive Officer, Michelle Wiggins as Vice President, Finance and Chief Financial Officer, Ed Wong as Vice President, Engineering, Albert Stark as Vice President, Operations, Fotis Kalantzis as Vice President, Exploration and Thomas Boreen as Vice President, Geology.
Upon closing of the Transaction, the new board of directors will be comprised of Richard McHardy, Don Archibald, Reg Greenslade, Michael Stark and Grant Greenslade. Sony Gill, a partner in the CFMA Group in the Calgary office of the national law firm McCarthy Tétrault LLP, will act as Corporate Secretary.
New Management Team
The New Management Team has a solid track record of creating value in high-growth, junior oil and gas companies through an integrated strategy of acquiring, exploiting and exploring. Most recently, the New Management Team led Spartan Oil Corp. (“Spartan Oil“), a light oil producer focused primarily in the Cardium light oil resource play at Pembina in central Alberta. At Spartan Oil, the New Management Team grew production from approximately 650 boepd to 5,500 boepd in the 18 months prior to its sale to Bonterra Energy Corp. in January, 2013 for approximately $500 million. Prior to Spartan Oil, the New Management Team led Spartan Exploration Ltd. (“Spartan Exploration“), a light oil producer with operations focused in the Cardium light oil play at Pembina and the Lower Shaunavon oil play in southwest Saskatchewan. While at Spartan Exploration, the New Management Team grew production from 0 boepd to 2,500 boepd in just over 3 years prior to its sale in June 2011 for approximately $228 million.
Having successfully founded, grown and sold a number of previous companies, the New Management Team will apply its past experience to grow the recapitalized Alexander through a combination of organic growth and acquisitions.
| Richard McHardy,
President and Chief Executive Officer |
Richard McHardy has been a founder of several public oil and gas companies and has extensive experience in leadership roles at public oil and gas companies. Mr. McHardy was President, CEO and a director at Spartan Oil. Previously Mr. McHardy was President, CEO and a director of Spartan Exploration, the President and a director of Titan Exploration Ltd. (“Titan“) and has served as corporate secretary for a number of other public companies. Prior to founding Titan, Mr. McHardy was a partner at McCarthy Tétrault LLP, one of Canada’s largest national law firms, where he practiced securities and corporate law. Mr. McHardy has over 18 years’ experience in the legal and oil and gas industries. | |
| Michelle Wiggins,
Vice President, Finance and Chief Financial Officer |
Michelle Wiggins was a co-founder of Spartan Oil and was the Vice President, Finance and CFO of Spartan Oil. Previously, Ms. Wiggins was the Vice President, Finance and CFO of Spartan Exploration and the Vice President, Finance and CFO of Titan. Ms. Wiggins has over 20 years’ experience in accounting and financial matters in the oil and gas industry. | |
| Albert Stark,
Vice President, Operations |
Albert Stark is a professional engineer with over 18 years of experience in the oil and gas industry. Mr. Stark was a co-founder of Spartan Oil and was the Vice President, Operations of Spartan Oil. Previously, Mr. Stark was the Vice President, Operations of Spartan Exploration and the Vice President, Operations of Titan. | |
| Fotis Kalantzis,
Vice President, Exploration |
Fotis Kalantzis is a geophysicist with over 20 years of experience in the oil and gas industry. Dr. Kalantzis was a co-founder of Spartan Oil and was the Vice President, Exploration of Spartan Oil. Previously, Dr. Kalantzis was the Vice President, Exploration of Spartan Exploration and the Exploration Manager at Innova Exploration Ltd. | |
| Ed Wong,
Vice President, Engineering |
Ed Wong is a professional engineer with over 20 years of experience in the oil and gas industry. Mr. Wong was a co-founder of Spartan Oil and was the Vice President, Engineering of Spartan Oil. Previously, Mr. Wong was the Vice President, Engineering of Spartan Exploration and the Hoadley Business Unit Manager at Samson Canada Resources Ltd. | |
| Thomas Boreen,
Vice President, Geology |
Thomas Boreen is a professional geologist with over 18 years of experience in the oil and gas industry. Dr. Boreen was the Chief Geologist at Spartan Oil and previously held positions with Suncor, Apache Canada, Shell Canada and Home Oil. |
The directors have strong track records and distinguished careers in both the oil and gas industry and capital markets and have held prominent lead positions within a range of successful companies. Their combined experience and expertise will provide the New Management Team with invaluable advice, guidance and support.
Corporate Strategy
The New Management Team has extensive experience in creating shareholder value through a focused full-cycle business plan and believes the current market environment provides an excellent opportunity to reposition Alexander as a high growth junior oil and gas company. The New Management Team believes that Alexander will be well positioned to take advantage of acquisition opportunities in the current market.
Following the completion of the Transaction, Alexander expects to focus on predominantly light oil opportunities in Western Canada, growing through a targeted acquisition and consolidation strategy complemented by development and exploration drilling. The current Alexander production base (current production of approximately 625 boepd) and the recapitalized corporate structure will allow for the exploitation of the current drilling inventory and expansion of the Corporation’s opportunity suite through internally generated prospects and strategic acquisitions.
Upon completion of the Transaction, the recapitalized Alexander is expected to have a net cash position of approximately $19 million, assuming the Private Placement is fully subscribed. The New Management Team believes that this starting point will provide them with a platform for aggressive growth through strategic acquisition and internally generated prospects.
Upon completion of the Transaction and subject to all regulatory and shareholder approvals, it is anticipated that the New Management Team will change the name of the Corporation from “Alexander Energy Ltd.” to “Spartan Energy Corp.”
Private Placement and Stock Options
Pursuant to the Private Placement, the Initial Investor Group, together with additional subscribers identified by the Initial Investor Group, will subscribe for up to a maximum of 140 million units (the “Units“) of Alexander at a price of $0.15 per Unit and up to a maximum of 36.67 million Common Shares at a price of $0.15 per Common Share for maximum total proceeds of $26.5 million. Each Unit shall be comprised of one Common Share and one Common Share purchase warrant (a “Warrant“). Each Warrant will entitle the holder to purchase one Common Share at a price of $0.20 for a period of five years. The Warrants will vest and become exercisable as to one-third upon the 20-day weighted average trading price of the Common Shares (the “Market Price“) equaling or exceeding $0.30, an additional one-third upon the Market Price equaling or exceeding $0.40 and a final one-third upon the Market Price equaling or exceeding $0.50.
The completion of the Private Placement is expected to occur in multiple tranches. The initial closing will include a minimum of 100 million Units subscribed for by the Initial Investor Group and certain other investors identified by the Initial Investor Group (the “Initial Closing“). The resignation of the current board of directors and management team of Alexander and the appointment of the New Management Team will occur contemporaneous with the completion of the Initial Closing. The closing of subscriptions for any remaining Units and of the Common Shares will occur o
