CALGARY, ALBERTA–(Marketwired – May 27, 2016) – Arsenal Energy Inc. (“Arsenal” or the “Company”) (TSX:AEI)(OTCQX:AEYIF) announces the sale of all its oil and natural gas properties located in the United States for a sales price of US $34 million. Proceeds from the sale have been used to reduce the Company’s outstanding bank credit facility. After applying the net proceeds of the sale, Arsenal estimates its current bank debt at approximately $11.7 million. In addition, Arsenal announces that it has entered into a Letter of Intent to sell 250 boe/d of Canadian production for total proceeds of $8.7 million. The transaction is expected to close on or before June 30, 2016. Upon successful completion of this sale transaction, Arsenal will have repaid approximately $70 million of bank indebtedness over an 18 month period.
Pro forma, upon successful completion of all the above-noted property sales: (a) Arsenal’s production is estimated to be approximately 1,250 boe/d – 85% oil; (b) Arsenal will retain its core Princess, Alberta property as well its Provost and Evi properties; (c) Arsenal’s operating costs are estimated at approximately $18.25/boe and royalties are estimated at approximately 17%; (d) based on forward strip pricing and current differentials, Arsenal’s netbacks for the remainder of 2016 are estimated to be approximately $15.80/boe; and (e) operating margins are estimated to be approximately $650,000/month. Proven Developed Producing reserves as at December 31, 2015, adjusted for all property sales, are 2.3 MMboe and the Net Present Value discounted by 10% including asset retirement obligations is $26 million. Proven plus Probable reserves as at December 31, 2015, adjusted for all property sales, are 5.2 MMboe and the Net Present Value discounted by 10% including asset retirement obligations is $69.8 million.