Press release from Marketwire
Argent Energy Trust Announces Bought Deal Convertible Debenture Financing to Accelerate Eagle Ford Oil Development
Tuesday, May 14, 2013
Argent Energy Trust Announces Bought Deal Convertible Debenture Financing to Accelerate Eagle Ford Oil Development15:20 EDT Tuesday, May 14, 2013
CALGARY, ALBERTA--(Marketwired - May 14, 2013) -
NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES
Argent Energy Trust ("Argent" or the "Trust") (TSX:AET.UN) is pleased to announce that it has entered into an agreement with a syndicate of underwriters, co-led by Scotiabank, CIBC and RBC Capital Markets, pursuant to which it will issue C$75 million principal amount of convertible unsecured subordinated debentures of Argent (the "Debentures") on a bought deal basis at a price of $1,000 per Debenture (the "Offering"). In addition, the Underwriters have been granted an over-allotment option, exercisable for a period of 30 days from closing of the Offering, to purchase up to an additional C$11.25 million principal amount of Debentures. If the over-allotment option is fully exercised, gross proceeds from the Offering will be approximately C$86.25 million.
The net proceeds of the Offering will be used to accelerate the development of the Trust's Eagle Ford acreage in both Gonzales and Fayette counties in Texas, given the positive results of the three Eagle Ford wells the Trust has drilled to date. The Trust believes it has approximately 180 Eagle Ford development locations on these lands. Initially the Offering will be used to repay outstanding indebtedness, providing working capital and availability on its $115 million credit facility and for general corporate purposes. The Trust is increasing its 2013 capital budget to $85 million from $41 million with the majority of the expenditures and the associated expected new Eagle Ford production to occur in the third and fourth quarters. The transition from Austin Chalk to Eagle Ford drilling will result in Q2 production in line with Q1 and still maintains the Trusts 2013 average production guidance of 5,500 boe/d to 5,600 boe/d. This plan will result in an estimated increased 2013 exit production rate of 6,300 boe/d, and should capture significant, currently unbooked Eagle Ford reserves.
The Debentures provide long-term fixed rate capital at an attractive cost, thereby further enhancing the sustainability of Argent's business model and supporting its ongoing strategy of delivering value to unitholders through the development of low-risk, predictable production.
The Debentures will bear interest at a rate of 6.00% per annum, payable semi-annually in arrears on the last day of June and December in each year commencing on December 31, 2013, and will mature on June 30, 2018 (the "Maturity Date"). The Debentures will be convertible at the holder's option into trust units of Argent (the "Units") at any time prior to the business day immediately preceding the earlier of the Maturity Date and the date fixed for redemption at a conversion price of $13.90 per Unit (the "Conversion Price"), subject to adjustment in certain circumstances. The Debentures will not be redeemable before June 30, 2016. On or after June 30, 2016 but prior to the Maturity Date, the Debentures will be redeemable at Argent's option at par plus accrued and unpaid interest, provided that the volume weighted average trading price of the Units on the Toronto Stock Exchange during the 20 consecutive trading days ending on the fifth trading day preceding the date on which notice of redemption is given is not less than 125% of the Conversion Price.
The Offering is expected to close on or about June 4, 2013 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange and the securities regulatory authorities.
About Argent Energy Trust
Argent is a mutual fund trust under the Income Tax Act (Canada) (the "Tax Act"). Argent's objective is to create stable, consistent returns for investors through the acquisition and development of oil and natural gas reserves and production with low risk exploitation potential, located primarily in the United States. Material information pertaining to Argent Energy Trust may be found on www.sedar.com or www.argentenergytrust.com.
Argent's units are traded on the Toronto Stock Exchange under the symbol AET.UN.
Forward Looking Statements
This press release includes forward-looking information within the meaning of applicable Canadian and United States securities legislation. All statements, other than statements of historical facts, that address activities, circumstances, events, outcomes and other matters that Argent budgets, forecasts, plans, projects, estimates, expects, believes, assumes or anticipates (and other similar expressions) will, should or may occur in the future, are considered forward-looking information. In particular, forward-looking information contained in this press release includes, but is not limited to, information and statements concerning the Offering, including that the Offering will close as expected; the Debentures to be issued pursuant to the Offering; regulatory and other approvals required for the Offering; the use of proceeds from the Offering; the number of drilling development locations; capital expenditure plans and timing; and expected future production.
In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The recovery and reserve estimates of the Trust's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. The forward-looking information provided in this press release is based on management's current beliefs, expectations and assumptions, based on currently available information as to the outcome and timing of future events. Argent cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking information is subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas.
These risks include, but are not limited to, oil and natural gas price volatility, Argent's access to cash flows and other sources of liquidity to fund its capital expenditures, its level of indebtedness, its ability to replace production, the impact of the current financial climate on Argent's anticipated business and financial condition, a lack of availability of or increases in costs of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, economic conditions and other risks as described in documents and reports that Argent files with the securities commissions or similar authorities in applicable Canadian jurisdictions on the System for Electronic Document Analysis and Retrieval (SEDAR). Any of these factors could cause Argent's actual results and plans to differ materially from those contained in the forward-looking information.
Forward-looking information is subject to a number of risks and uncertainties, including those mentioned above, that could cause actual results to differ materially from the expectations set forth in the forward-looking information. Forward-looking information is not a guarantee of future performance or an assurance that our current assumptions and projections are valid. All forward-looking information speaks only as of the date of this press release, and Argent assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking information, except as required by law. You should not place undue reliance on forward-looking information. You are encouraged to closely consider the additional disclosures and risk factors contained in Argent's periodic filings on SEDAR that discuss in further detail the factors that could cause future results to be different than contemplated in this press release.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio of six Mcf to one bbl may be misleading as an indication of value.
FOR FURTHER INFORMATION PLEASE CONTACT:
Argent Energy Trust
Co-Chief Executive Officer & President
Argent Energy Trust
Chief Financial Officer