CALGARY, ALBERTA–(Marketwired – Feb. 29, 2016) –
Tamarack Valley Energy Ltd. (“Tamarack” or the “Company“) (TSX:TVE) is pleased to announce that it has entered into a bought deal financing agreement with a syndicate of underwriters led by National Bank Financial Inc. (the “Underwriters”), pursuant to which the Underwriters have agreed to purchase for resale to the public, on a bought deal basis, 13,014,000 common shares (“Common Shares“) at an issue price of $2.92 per Common Share resulting in gross proceeds of approximately $38 million (the “Offering“).
In addition, the Underwriters have been granted an over-allotment option, exercisable for a period commencing at closing of the Offering (the “Closing“) and ending 30 days following Closing, to purchase up to an additional 1,952,100 Common Shares at a price of $2.92 per Common Share, to cover over-allotments, if any, and for market stabilization purposes. If the over-allotment option is fully exercised, gross proceeds from the Offering will be approximately $43.7 million.
The net proceeds from the Offering will be used to initially reduce indebtedness and for general corporate purposes.
The Offering will be completed by way of short form prospectus in all provinces of Canada, and on a private placement basis in the United States pursuant to exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended. Completion of the Offering is subject to necessary regulatory approvals, including the approval of the Toronto Stock Exchange, and is expected to close on or about March 18, 2016.
2016 Capital Program and Guidance Re-affirmed
Tamarack’s top priority continues to be maintaining balance sheet strength and financial flexibility within an uncertain commodity price environment while continuing its focus on meaningful per share growth for its shareholders. This Offering will allow Tamarack to prudently preserve an already low debt to cash flow multiple should low commodity prices persist longer term and provide the ability to appropriately capitalize on accretive acquisition and drilling opportunities that are readily becoming available. The Company will continue to focus on adding drilling inventory that meets a strict investment criteria of approximately 1.5 year payout or less at current strip prices. Over the past two years Tamarack has increased its quick payback inventory tenfold by successfully negotiating several one-off strategic acquisitions within our core areas. It is expected that the current environment will allow the Company the opportunity to continue to build inventory for future growth.
After taking into effect the net proceeds from the Offering the estimated 2016 year end 12-month trailing debt to cash flow (including hedges) ratio decreases from the previously disclosed range of 1.6 – 2.3 times to 0.9 – 1.4 times, with at least $88 million of liquidity maintained based on existing bank lines.
As outlined in the Company’s press release dated February 24, 2016, Tamarack is re-affirming its 2016 guidance ranges:
- Capital expenditures of $40-57 million, effectively living within cash flow.
- Average production of 8,700-9,700 boe/d (approximately 51-57% oil & NGLs).
- Exit production of 8,600-9,800 boe/d (approximately 50-55% oil & NGLs).
- Assumes: WTI average $33.00/bbl – $40.00/bbl USD, Edmonton par price average $41.00/bbl – $51.45/bbl, AECO average $2.00/GJ to $2.45/GJ, Canadian/US dollar exchange rate range of $0.70 to $0.72.
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas exploration and production company committed to long-term growth and the identification, evaluation and operation of resource plays in the Western Canadian Sedimentary Basin. Tamarack’s strategic direction is focused on two key principles – targeting resource plays that provide long-life reserves, and using a rigorous, proven modeling process to carefully manage risk and identify opportunities. The Company has an extensive inventory of low-risk development oil locations in the Pembina, Wilson Creek, Garrington and Lochend Cardium fairway and the Redwater shallow Viking play in Alberta. With a balanced portfolio and an experienced and committed management team, Tamarack intends to continue to deliver on its promise to maximize shareholder return while managing its balance sheet.