CALGARY, Dec. 5, 2016 /CNW/ – Northern Blizzard Resources Inc. (“Northern Blizzard” or the “Company”) (TSX: NBZ) is pleased to announce a revised monthly dividend of $0.02 per common share, the discontinuance of stock dividends under its Stock Dividend Program, the intention to purchase up to $75.0 million of its common shares under a substantial issuer bid and 2017 guidance.
DIVIDEND
Northern Blizzard’s Board of Directors (the “Board”) considers a number of factors in determining the dividend, including free cash flow, payout ratios, liquidity of the Company and overall returns to shareholders. In order to reduce shareholder dilution and better align the dividend yield with the current commodity price environment, the Board has approved a revised monthly dividend of $0.02 per common share (“Share”), down from $0.04 per Share currently. In addition, stock dividends under the Stock Dividend Program (“SDP”) will be discontinued.
The revised monthly dividend of $0.02 per Share will be effective for the December 2016 dividend, payable on January 16, 2017.
The annualized dividend of $0.24 per Share represents an annual yield of approximately 6% based on the five-day volume weighted average trading price of Northern Blizzard’s Shares of $3.73 per share (as of December 2, 2016).
The Company’s dividend payable on December 15, 2016 ($0.04 per Share) will be paid to shareholders as previously announced and will be the last dividend eligible for the SDP until further notice.
Northern Blizzard continually assesses dividend levels in light of commodity prices, hedge position, capital expenditure programs and production volumes to ensure that dividends are in line with the Company’s long-term strategy and objectives. The actual amount of future monthly dividends is subject to the discretion of the Board.
SUBSTANTIAL ISSUER BID
Northern Blizzard intends to commence a substantial issuer bid (the “Offer”) pursuant to which the Company will offer to purchase for cancellation up to $75.0 million of its Shares at a price of $4.00 per Share. The maximum number of Shares that may be purchased by the Company is 18,750,000, representing approximately 15.3% of the currently issued and outstanding Shares (122,539,239 as of December 2, 2016). The purchase price of $4.00 per share represents a 7% premium over the five-day volume weighted average trading price of Northern Blizzard’s Shares of $3.73 per share (as of December 2, 2016). The purchase will be funded using cash on hand.
Details of the Offer, including the full terms and conditions of the Offer and instructions for tendering Shares to the Offer will be included in the formal offer to purchase and issuer bid circular and other related documents (the “Offer Documents”), which are expected to be mailed to shareholders, filed with securities regulators and made available in mid-December on the Company’s website at www.northernblizzard.com and on SEDAR at www.sedar.com. The Offer will not be conditional on any minimum number of Shares being tendered, except as described below, although it is subject to various other conditions that are typical for a transaction of this nature. The Offer is expected to remain open for acceptance until the second half of January 2017, unless withdrawn or extended by the Company. If more than 18,750,000 Shares (or such greater number as the Company determines it is willing to take up and pay for) are properly tendered to the Offer, the Company will take-up and pay for the tendered Shares on a pro-rata basis according to the number of Shares tendered (with adjustments and to avoid the purchase of fractional Shares).
NGP IX Northern Blizzard S.à.r.l. (“NGP IX”) and R/C Canada Coöperatief U.A. (“R/C Canada”), the Company’s significant shareholders, have indicated that they intend to tender all of their shares pursuant to the Offer. Collectively, NGP IX and R/C Canada own 71.3% Northern Blizzard’s currently issued and outstanding Shares.
Neither the Company or the Board make any recommendation to shareholders as to whether to tender or refrain from tendering Shares to the Offer. Shareholders should review the Offer Documents carefully and are strongly encouraged to consult with their financial, tax and legal advisors prior to making any decision with respect to the Offer.
This news release is neither an offer to purchase nor a solicitation of an offer to sell any Shares. The solicitation and the offer to purchase Shares by the Company will be made pursuant to the Offer Documents that the Company will file with the Canadian securities regulatory authorities and that it will distribute to its shareholders.
2017 GUIDANCE
2017 guidance and assumptions are as follows: |
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Production (boe/d) |
17,100 |
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Pricing |
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WTI (US$/bbl) |
55.00 |
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WTI / WCS differential (US$/bbl) |
(15.00) |
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CAD/USD exchange rate |
1.300 |
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WCS ($/bbl) |
52.00 |
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AECO ($/mcf) |
2.75 |
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Expenses |
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Average royalty rate (%) |
11% |
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Operating ($/boe) |
15.40 |
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Transportation ($/boe) |
1.90 |
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Corporate costs (1) ($/boe) |
5.70 |
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Including hedging |
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Funds from operations ($ millions) |
110 |
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Funds from operations per boe ($/boe) |
17.65 |
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Excluding hedging |
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Funds from operations ($ millions) |
125 |
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Funds from operations per boe ($/boe) |
20.15 |
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Capital expenditures and decommissioning costs ($ millions) |
60 |
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Payout ratio |
78% |
Note: |
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(1) |
Corporate costs include general and administrative expenses, cash finance costs and other miscellaneous cash items. |
Production for 2017 includes the recently completed sale of the Coleville property for $58.0 million (see news release dated November 28, 2016) and pending non-core asset sales for approximately $30.0 million. The pending asset sales are expected to close by the end of December 2016. Production from the properties for the month of November 2016 was approximately 1,200 boe/d (based on field estimates).
The guidance provided in the table above is based on a number of material assumptions and factors set out above and under the heading “Forward-Looking Statements” in this news release. This financial outlook is included to provide readers with an understanding of the Company’s operations for 2017. Readers are cautioned that the information may not be appropriate for other purposes. The actual results of Northern Blizzard’s operations will likely vary from the amounts set forth in the table above, and such variations may be material. See “Forward-Looking Statements” in this news release for a discussion of the risks that could cause actual results to vary. The foregoing guidance has been approved by management as of the date of this news release.
Northern Blizzard
Northern Blizzard is a Canadian crude oil production and development company focused on maximizing oil recovery from its large-scale low viscosity heavy oil resource base. The corporation’s operations, infrastructure and concentrated land position are focused in southwest Saskatchewan. Northern Blizzard’s Shares trade on the Toronto Stock Exchange under the symbol NBZ.