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Press release from Marketwire

Bonavista Energy Corporation Announces Strategic Property Acquisition and Bought Deal Financing

Tuesday, August 28, 2012

Bonavista Energy Corporation Announces Strategic Property Acquisition and Bought Deal Financing15:54 EDT Tuesday, August 28, 2012CALGARY, ALBERTA--(Marketwire - Aug. 28, 2012) -NOT FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWThis news release is not an offer to sell or a solicitation of offers to buy the Common Shares in the United States. The Common Shares have not been and will not be registered under the United States Securities Act and may not be offered or sold in the United States except in transactions exempt from such registration.Bonavista Energy Corporation ("Bonavista") (TSX:BNP) is pleased to announce that it has entered into an agreement to acquire certain natural gas weighted properties (the "Acquired Properties") located within its deep basin core area in west central Alberta. The acquisition has an effective date of July 1, 2012 and is expected to close on or about October 1, 2012 for an estimated purchase price at closing of $155 million. The completion of the transaction is subject to customary regulatory approvals and other conditions. Transaction highlights:The acquisition is consistent with Bonavista's strategy of acquiring high quality, multi-zone oil and natural gas assets with significant low risk development opportunities and extensive gathering, compression and processing infrastructure. At closing, production from the Acquired Properties is estimated to be 6,700 boe per day (94% natural gas). The Acquired Properties are situated on approximately 113,000 net acres of land located adjacent to Bonavista's existing deep basin land position in west central Alberta. Bonavista has identified approximately 27 high impact horizontal drilling locations offering the potential to significantly enhance production and resource recovery. The primary zones include the Wilrich and Bluesky as well as several secondary horizons such as the Rock Creek, Notikewin, Gething, Cadomin and Second White Specs. In addition, the Acquired Properties offer numerous low risk vertical drilling locations and recompletion opportunities with a predictable, low cost production base that is well positioned for a gradual improvement in natural gas prices.Reserves: Natural gas Oil and Natural gas liquids Total 10% NPV (1) (before tax) (Bcf)(mbbls)(mboe)($ millions)Total proved (2)1021,51818,523161Total proved plus probable (2)1332,07624,146198Notes: (1) Estimated net present values do not represent fair market value. (2) Reserves are working interest reserves prior to the deduction of royalties. (3) The Acquired Properties were evaluated effective July 1, 2012 based on Bonavista's internal engineering report in accordance with NI 51-101, incorporating strip prices effective August 22, 2012. (4) The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.Transaction benefits to Bonavista:Increases Bonavista's estimated production by 10% to approximately 74,500 boe per day (61% natural gas weighted), on closing of the acquisition; Increases Bonavista's total proved plus probable reserves by 7%; Doubles Bonavista's land position in the deep basin enhancing our operational presence and creating an opportunity to improve both capital and operational efficiencies in the area; The Acquired Properties offer attractive operating costs of approximately $4.50 per boe with 94% of the production operated; Improves Bonavista's control of strategic infrastructure in the deep basin including operatorship of two processing facilities totaling 102 mmcf per day of gross licensed throughput capacity; Offers attractive acquisition metrics of approximately $23,000 per flowing boe and $10.56 per boe proved plus probable, including future development capital and adjusting for land and seismic value of approximately $6.8 million; Offers significant organic growth opportunities, providing Bonavista with the ability to continue its strategy of adding low cost production and reserves through internal development and optimization; and Augments Bonavista's existing operational presence in a prospective, multi-zone area with significant undeveloped resource accumulation. Financing:In conjunction with the acquisition, Bonavista has entered into an agreement to sell, on a bought deal basis, 18,200,000 common shares ("Common Shares") at a price of $16.50 per Common Share for gross proceeds of $300,300,000 (the "Offering") to a syndicate of underwriters co-led by TD Securities Inc. and CIBC World Markets Inc. and including RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., National Bank Financial Inc., Peters & Co. Limited, FirstEnergy Capital Corp., Macquarie Capital Markets Canada Ltd. and HSBC Securities (Canada) Inc. Completion of the Offering is subject to certain conditions including normal regulatory and stock exchange approvals. The Common Shares will be offered in all provinces of Canada, except Quebec, by way of a short form prospectus. The closing of the Offering is expected to occur on or about September 18, 2012. TD Securities Inc. and CIBC World Markets Inc. acted as advisors with respect to financial matters.Outlook:This acquisition complements our existing inventory of low cost, economic drilling opportunities and significantly enhances our operational presence in the deep basin. This will ultimately lead to improvements in both capital and operating efficiencies in the area. To accommodate this acquisition, Bonavista's Board of Directors have approved an increase in its 2012 capital budget to $410 million, including $10 million of development expenditures allocated to the Acquired Properties. This revised capital budget consists of $385 million in exploration and development spending and $25 million in net acquisition spending. With an expected closing date of October 1, 2012, Bonavista anticipates fourth quarter 2012 production of between 73,000 and 74,000 boe per day and average 2012 production of between 69,500 and 70,500 boe per day.Advisory Regarding Forward-Looking Information and StatementsThis press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward looking statements and information concerning: closing of the Offering and the acquisition and the expected timing of such closings; the estimated closing purchase price of the Acquired Properties; estimated production; estimated operating costs; anticipated benefits to be obtained as a result of the acquisition including increased production and reserves, anticipated improvements in capital and operational efficiencies, increased infrastructure control, organic growth opportunities and resource potential; Bonavista's 2012 capital budget and allocation thereof; anticipated 2012 fourth quarter and 2012 average production; and Bonavista's development and drilling programs, plans and opportunities. The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Bonavista, including completion of the acquisition and the Offering on the timing planned; prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future well production rates; reserve and resource volumes; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the receipt, in a timely manner of regulatory, stock exchange and other required approvals. Although Bonavista believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Bonavista can give no assurance that they will prove to be correct. There is no certainty that Bonavista will achieve commercially viable production from its undeveloped lands and prospects. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the failure to obtain the necessary regulatory, stock exchange and other regulatory approvals and on the timelines it has planned, the risk that some other condition to the closing of the Offering or the acquisition is not satisfied; the oil and gas industry in general such as: operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation or petroleum and natural gas and loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; stock market volatility; and changes in legislation, including but not limited to tax laws, royalty rates and environmental regulations. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Bonavista are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Bonavista undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.Boe AdvisoryThe term "boe" or barrels of oil equivalent may be misleading, particularly if used in isolation. A Boe conversion ratio of six thousand cubic feet per barrel (6 mcf: 1 bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.FOR FURTHER INFORMATION PLEASE CONTACT: Chairman & CEOKeith A. MacPhailORPresident & COOJason E. SkeharORSenior Vice President & CFOGlenn A. HamiltonOR1500, 525 - 8th Avenue SWBonavista Energy CorporationCalgary, AB T2P 1G1(403) 213-4300www.bonavistaenergy.com