Cequence Energy Ltd. announces acquisition of HFG Holdings Inc.

CALGARY, Sept. 25 /CNW/ - Cequence Energy Ltd. ("Cequence" or the "Company") (TSX: "CQE") announced today that it intends to make an offer (the "Offer") to acquire all of the outstanding common shares ("HFG Shares") of HFG Holdings Inc. ("HFG"), not already owned by Cequence or its affiliates or associates, on the basis of 0.04 of a common share ("Cequence Shares") of Cequence for each outstanding HFG Share, resulting in the issuance of approximately 2.645 million Cequence Shares.

Based on the volume weighted average trading price of the Cequence Shares for the 5 trading days ended September 24, 2009, the exchange ratio for the transaction represents a deemed price of $0.16 per HFG share, representing a 23% premium to the closing price $0.13 for the HFG Shares on September 23, 2009, the last day on which the HFG shares were traded. The total value of the Cequence common shares exchanged using the 5 day weighted average trading price ended September 24, 2009 will be approximately $10.6 million.

The Offer will be made by way of an offer to purchase and a take-over bid circular which will be mailed to all HFG shareholders. The Offer will be subject to certain conditions including acceptance of the Offer by holders of at least 90% of the outstanding HFG Shares (calculated on a diluted basis) not already owned by Cequence and receipt of all required regulatory approvals. The Offer is expected to be mailed in early October and will remain open for a period of not less than 35 days following the date of mailing.

Cequence currently beneficially owns 161,546,590 HFG Shares representing approximately 71% of the currently outstanding HFG Shares. In addition, Cequence has entered into lock-up agreements with certain other major shareholders of HFG (the "Locked-Up Shareholders") pursuant to which the Locked-Up Shareholders have agreed to tender to the Offer and not withdraw, except in certain circumstances, 54.0 million HFG Shares (the "Locked-Up Shares"), representing approximately 24% of the currently outstanding HFG Shares and approximately 82% of the outstanding HFG Shares (calculated on a diluted basis) not already owned by Cequence or its affiliates or associates.

As a result of the agreements with the Locked-Up Shareholders to tender the Locked-Up Shares to the Offer, Cequence currently expects the 90% minimum condition to be satisfied at the expiry time of the Offer. Consequently, provided all of the other conditions to the Offer are satisfied or waived by Cequence, Cequence expects to immediately acquire any remaining HFG Shares not tendered to the Offer pursuant to the compulsory acquisition procedures of the Business Corporations Act (Alberta) and to delist the HFG Shares from trading on the TSX Venture Exchange.

Management of Cequence believes acquiring 100% of the HFG Shares will result in a number of cost saving synergies, increased efficiencies in the development and exploitation of its interests in the Montney fairway as well as providing significant benefits to HFG shareholders. In particular, Cequence is a well capitalized company with increased liquidity and access to capital which will allow it to properly capitalize HFG's assets. Cequence's capital program is designed to ensure HFG satisfies its obligations to prevent its rights to certain lands from expiring as well as satisfying HFG's estimated remaining $10.5 million flow-through obligation prior to the end of 2009.

Cormark Securities Inc. acted as financial advisor to Cequence with respect to this transaction.

Notice to United States Shareholders

The Offer is made for the securities of a Canadian company and is subject to Canadian disclosure requirements that are different from those of the United States. Financial statements included or incorporated by reference in the take-over bid circular and Offer have been prepared in accordance with Canadian generally accepted accounting principles and are subject to Canadian auditing and auditor independence standards, which differ from United States generally accepted accounting principles and United States auditing and auditor independence standards. As a result, such financial statements may not be comparable to the financial statements of United States companies.

It may be difficult for U.S. shareholders to enforce their rights and any claim that they may have arising under United States federal or state securities laws, as Cequence is incorporated under the laws of Alberta, Canada, and all or most of its assets are located in Canada and all of its officers and directors are residents of Canada. U.S. shareholders may not be able to sue a foreign entity or its officers or directors in a foreign court for violations of U.S. federal or state securities laws. It may be difficult to compel a foreign entity and its affiliates to subject themselves to a U.S. Court's judgment.

Cequence Energy Ltd. is a publicly traded Canadian energy company involved in the acquisition, exploitation, exploration, development and production of natural gas and crude oil in western Canada. Further information about Cequence may be found in its continuous disclosure documents filed with Canadian securities regulators at www.sedar.com.

Forward Looking Information

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect","will", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, information with respect to: information relating to the acquisition of HFG and the benefits thereof; development, exploration, acquisition and disposition plans and the timing thereof; reserve quantities and the discounted present value of future net cash flows from such reserves; future production levels. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding, among other things: the impact of increasing competition; the ability to complete the acquisition of HFG; timing for completing the acquisition of HFG; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking information. The material risk factors affecting the Company and its business are contained in the Company's Annual Information Form which is available under the Company's issuer profile on SEDAR at www.sedar.com.

The forward-looking information contained in this press release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward looking information contained in this press release is expressly qualified by this cautionary statement.

Additional Advisories

This press release does not constitute an offer for or solicitation of HFG Shares in any jurisdiction. Any such solicitation would be made only by formal offer to purchase and take-over bid circular and only in those jurisdictions where Cequence may legally do so.

Boes are presented on the basis of one Boe for six Mcf of natural gas. Disclosure provided herein in respect of Boes may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

    
    The Toronto Stock Exchange has neither approved nor disapproved the
    contents of this press release.
    

%SEDAR: 00023788E

SOURCE Cequence Energy Ltd.

For further information: For further information: Howard Crone, President and Chief Executive Officer, (403) 229-3050, hcrone@cequence-energy.com or David Gillis, Vice President, Finance and Chief Financial Officer, (403) 229-3050, dgillis@cequence-energy.com


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