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Latest Headlines
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Dec 10, 2009 6:48:00 AM MST
Junior oilco Result Energy buys Nexstar Energy, other assets for $98M (Result-Energy-Nexstar)
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CALGARY _ Oil and gas junior Result Energy Inc. (TSXV:RTE) is making a number of moves to position itself as a mid-level light oil player in Western Canada, chief among which is the acquisition of fellow oilpatch company Nexstar Energy Ltd. (TSXV:NXE.A) for about $44.4 million including debt.
Result said Thursday it will acquire all of Nexstar´s shares at an exchange ratio of 1.05 Result shares with a deemed value of 28 cents for each Nexstar share, plus assume $6 million in debt.
On top of that deal, Calgary-based Result said it has also agreed to buy two packages of assets in its key operating area for a total $54 million and a private company for $9.7 million in cash and shares, bringing the total of its announced acquisitions to about $98 million.
To facilitate the purchases and its repositioning, the company plans a $125-million financing.
"The acquisitions and financing announced today position us as a premier Cardium light oil resource player," Result president and CEO Brett Herman said in a statement.
"The Cardium light oil resource play holds tremendous potential and we believe that the foundation we have laid today provides an excellent growth platform to successfully ute management´s strategy of acquiring, exploiting and exploring."
In the asset acquisitions, Result said it will buy a contiguous land block in the West Pembina area which it "believes to be highly prospective for Cardium light oil production" and is currently producing more than 100 barrels of oil equivalent per day, weighted 75 per cent natural gas.
The price to be paid will include 14.3 million shares plus $50 million cash and is expected to close by Dec. 29.
The private company to be acquired holds nine net sections of prospective Cardium acreage, currently producing more than 50 barrels per day.
In its bought-deal financing, Result said it will issue 445 million special warrants at 28 cents each to allow it to complete the acquisitions and fund a two-year development drilling program.
Nexstar´s board has approved the deal and shareholders representing about 30 per cent of its equity have agreed to tender their shares. A meeting for Nexstar shareholders to vote on the deal will be held in early February.
Trading in shares of both companies was halted at the open of the TSX Venture Exchange.
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