CALGARY, Feb. 17, 2012 /CNW/ - Caledonian Royalty Corporation
("Caledonian") is pleased to announce that it has closed the
acquisition of Lario Oil & Gas Company ("Lario"), a privately held
Canadian company for a total purchase price of $35.7 million. $25.7
million of the purchase price was paid on closing and the remaining $10
million is to be paid to the vendor on or before September 30, 2012.
Lario will be merged with Caledonian in the near future and all
correspondence for Lario can now be directed to Caledonian's offices.
Current production of approximately 820 barrels of oil equivalent (boe)
per day, split 52% gas and 48% oil and natural gas liquids;
The Lario transaction is expected to be accretive to Caledonian on a per
royalty unit basis for cash flow, reserves and production;
At current commodity prices approximately 74% of the revenues of Lario
are derived from oil and natural gas liquids providing support for
Caledonian's distributable cash flows during a period of low natural
Diversification of Caledonian's current portfolio of royalty interests
to include non-operated working interests, increased oil and natural
gas liquids and operational potential;
The acquisition provides exposure to:
Future growth potential from oil and liquids rich gas;
The Edson and Niton areas in Alberta, characterized by long life
production from horizontal well development with significant future
High quality operators including Crocotta Energy Inc. and ConocoPhillips
Approximately 78 gross (23 net) sections of land with upside through
more than 42 identified low-risk drilling locations; and a proposed
waterflood project at Medicine River in which Caledonian can
participate, farmout or sell in order to enhance unitholder value;
Unique financing structure with a vendor backstop of the balance of the
purchase price and a portion of Caledonian's credit facility with
Alberta Treasury Branches.
Caledonian's independent reservoir engineers, GLJ Petroleum Consultants
has assigned reserves effective January 1, 2012 in accordance with NI
51-101 as follows:
Approximately 2.7 million boe of proved plus probable (42% oil and
natural gas liquids) and 1.8 million boe of proved reserves (38% oil
and natural gas liquids);
Reserve life index of 9.5 years proved plus probable and 7.3 years
2012 Cash Flow Multiple of approximately 5.6 times based on production
of 820 boe/d (Cdn$98.98/bbl WTI, Cdn$3.48/mcf AECO);
$43,535 per producing boe;
Proved plus probable reserves of $13.17 per boe and proved reserves of
$19.72 per boe.
James S. Kinnear, Chairman and CEO, stated: "This acquisition adds to holdings in our core focus areas of Edson,
Niton and Medicine River providing steady cash flow from solid
producing areas with significant upside potential. This transaction
also increases the ratio of revenues derived from oil and natural gas
liquids and is accretive to Caledonian Royalty Unitholders."
Cautionary Statement Regarding Forward-Looking Information
This news release offers Caledonian's future plans and operations as at
February 7, 2012. Certain information contained in this news release,
including future financial or operating performance, may be deemed
"forward looking". All statements in this presentation, other than
statements of historical fact, that address events or developments
concerning Caledonian that Caledonian expects to occur, are
"forward-looking statements". Forward-looking statements are
statements that are not historical facts and are generally, but not
always, identified by the words "expects", "does not expect", "plans",
"anticipates", "does not anticipate", "believes", "intends",
"estimates", "projects", "potential", "scheduled", "forecast", "budget"
and similar expressions, or that events or conditions "will", "would",
"may", "could", "should" or "might" occur. All such forward-looking
statements are subject to important risk factors and uncertainties,
many of which are beyond Caledonian's ability to control or predict.
This forward looking information is provided to allow readers to better
understand Caledonian's business and prospects and may not be suitable
for alternative purposes.
SOURCE Caledonian Royalty Corporation
For further information:
James S. Kinnear, Chairman and CEO or
Charles V. Selby, President
Caledonian Royalty Corporation
Suite 2200, 300 - 5th Ave S.W.
Calgary Alberta T2P 3C4