TORC Provides Strategic Acquisition in Southeast Saskatchewan

Source: 4/27/2015, Location: North America

TORC Oil & Gas Ltd. has entered into an agreement to acquire high quality, light oil assets which are comple mentary to TORC’s existing assets in southeast Saskatchewan.

The strategic acquisition (the “Acquisition”)includes 4,750boepd (~98% light oiland liquids) of low decline, highnetback,light oil producing assetsin southeast Saskatchewan and Manitoba (the “Acquired Assets”). In addition, the Acquired Assets include ownership of freehold mineral titleon morethan 80 net sections of landin southeast Saskatchewan.Total consideration for the Acquisition is $430million, payablein cash. In conjunction with the Acquisition, TORC’s cornerstone investor, the Canadian Pension Plan Investment Board (“CPPIB”), has committed to invest up to a maximum of $149,985,000 through a private placement of subscription receipts (the “CPPIB Investment”).

Additionally, TORC has entered into an agreement for a $250,480,000 bought deal prospectus offering of subscription receipts (the “Bought Deal Financing” and together with the CPPIB Investment, the “Financings”) offered through a syndicate of underwriters (the “Underwriters”) as described below, for total gross equity proceeds of $400,465,000.

The Acquisition and Financingsfurther strengthen TORC’sbusiness modelwhich isfocused on delivering disciplined growth and a sustainable dividend to shareholders.

Pursuant to a purchase and sale agreement (the “Agreement”) with an independent Canadian oil and gas company, dated April 26, 2015, TORC has agreed to acquire the Acquired Assetsfor cash considerationof $430 million, prior to customary closing adjustments.The Acquired Assets are complementary to TORC’s existing operations in southeast Saskatchewan and provide operating and strategic synergies.Included in the Acquired Assets are 80 net sections of fee title lands which are located in areas with increasing industry activity in southeast Saskatchewan.

The undeveloped portion of the fee title acreage,in conjunction with 40,000 net acres of additional undeveloped land and significant proprietary seismic data being acquired in this transaction,has been conservatively valued by TORC at $85 million.The effective date of the Acquisition is May 1, 2015 with closing expected in June 2015.

The Acquisition is consistent withTORC’s strategy to capitalize onopportunities to enhance the quality of its asset base throughout the commodity price cycle.The Acquisition is accretive to TORC on a reserves, production and cash flow per share basis.The Acquired Assetsare 98% light oil and liquids and have an average decline rate ofapproximately 20%,providinga dependable free cash flow stream.

Additionally, TORC has identified approximately 170 (net) high quality light oil drilling locations on the Acquired Assets, which are expected to provide some of the highest relative economic returns in the Western Canadian Sedimentary Basin in all commodity price environments.The Acquisition will improve TORC’s decline profile, operating netback and light oil drilling inventory further strengtheningTORC’s disciplined growth plus sustainable dividend business model.With TORC having a long history operating properties in thearea,integration and go forward operations areanticipated to be seamless.

Related Categories: Coalbed Methane  General  Heavy Oil  Methane Clathrate  Oil Sands  Oil Shale  Shale Gas  Tight Gas  Tight Oil 

Related Articles: Coalbed Methane  General  Heavy Oil  Methane Clathrate  Oil Sands  Oil Shale  Shale Gas  Tight Gas  Tight Oil 

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