New acquisition...looks good Eagle Energy Tru

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Eagle Energy Trust Announces Strategic Alberta Acquisition in the Twining Field
T.EGL.UN | 5 minutes ago
CALGARY, ALBERTA--(Marketwired - July 22, 2015) - Eagle Energy Trust ("Eagle" (TSX:EGL.UN) is pleased to announce that it has entered into an agreement with a private company ("Privateco" for the acquisition by Eagle of all the issued and outstanding shares of Privateco (the "Transaction" . The Transaction is valued at approximately $30 million, including Privateco's indebtedness, and will be funded out of Eagle's existing credit facility of $110 million ($US 85 million). It will be completed by the amalgamation of Privateco with a newly incorporated Eagle subsidiary and requires Privateco's shareholder approval. The Transaction is expected to close by the end of August 2015. Directors, officers and a number of other Privateco shareholders, owning an aggregate of more than two-thirds of Privateco's shares, have signed support agreements to vote in favor of the Transaction.

Privateco has estimated production of approximately 750 barrels of oil equivalent per day ("boe/d" (64% oil and natural gas liquids) from the Twining field in Alberta. Privateco has been redeveloping the Twining field with horizontal wells in the Pekisko Pool. This pool is estimated to contain discovered oil initially-in-place of approximately 900 million barrels, with a current recovery factor of less than 5%. To date, Privateco has drilled 10 horizontal wells and has built a new battery to handle current and future development plans, which include over 30 locations that Eagle believes have attractive economic returns in the current price environment.

In this news release, figures are presented in Canadian dollars unless otherwise indicated.

The Acquisition

The highlights of the Transaction are:

2.1 MMboe of proved reserves and 7.2 MMboe of proved plus probable reserves.

Production of approximately 750 boe/d from 92 gross (48 net) wells in the largest Pekisko oil pool in the Western Canadian Sedimentary Basin.

64% light oil and natural gas liquids.

80% working interest in approximately 41,502 gross (32,650 net) acres.

Majority operated.

Approximately $92 million of tax pools, including approximately $40 million of non-capital losses.

Eagle's 2015 pro forma debt to cash flow of approximately 2x.

Over 10% accretive to Eagle pro forma cash flow per unit.

Eagle pro forma corporate payout ratio maintained below 100%.

Privateco's total corporate decline rate is approximately 20%, which maintains Eagle's pro forma current corporate decline rate below 20%.

Richard Clark, President and Chief Executive Officer of Eagle, commented, "This accretive acquisition is an important step in our expansion into Canada and we are excited to commence building an operations team here. The Transaction adds a solid, low decline production base of 750 boe/d and an attractive development portfolio with over 30 drilling locations that Eagle believes have attractive returns in today's commodity price environment. This acquisition significantly increases our drilling inventory and further supports our key objective of providing sustainable distributions to our unitholders. These locations provide Eagle with the ability to sustain our production rate of approximately 3,750 boe/d for over 5 years."

Kelly Tomyn, Chief Financial Officer of Eagle, added, "Following this transaction, Eagle will maintain its solid balance sheet and financial flexibility. Based on our existing credit facility, Eagle's unutilized bank lines will exceed $40 million excluding any additional lending value for the Privateco transaction, which will be determined during Eagle's overall mid-year borrowing base review. In addition, based on both strip pricing and our pro forma budget assumptions of $US 60 WTI with an FX rate of one dollar U.S. to $1.25 Canadian, the year-end 2015 debt to cash flow ratio approximates 2x and the corporate payout ratio remains below 100%."

The Transaction is subject to customary closing conditions including the approval by Privateco's shareholders. The Board of Directors of Privateco has concluded that the Transaction is in the best interests of Privateco and has unanimously recommended that Privateco shareholders vote their shares in favor of the Transaction. An information circular is expected to be mailed to all Privateco shareholders before August 10, 2015, and the special meeting of Privateco shareholders is anticipated to be held in late August 2015. Closing is expected to occur shortly thereafter.

Privateco is prohibited from soliciting or initiating any discussion regarding any other transaction or sale of assets. Eagle is entitled to match unsolicited competing proposals and will receive a termination fee of $750,000 if a superior proposal is accepted by Privateco.


Read more at http://www.stockhouse.com/news/press-releases...GarAdE1.99

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