CALGARY, Alberta, Dec. 3, 2012 /CNW/ - Equal Energy Ltd. (TSX: EQU)
(NYSE: EQU) today reasserted its commitment to a prudent and balanced
long-term strategy in the face of reckless demands by two dissident
shareholders and bloggers that risk jeopardizing the company's
"Our recently-completed strategic review seeks a balance between future
growth and return of capital to shareholders", Don Klapko, Equal's
President and Chief Executive Officer, said. "By contrast, the
dissidents' demands are more short-sighted, and not in the interests of
long-term financial stability and sustainable valuation for our
Mr. Klapko added: "We have worked in good faith over several months to
engage the dissidents, Mr. Nawar Alsaadi and Dr. Adam Goldstein. They
continue to show little understanding of the opportunities and risks in
the natural-gas business, or of Equal's operations and financial
capabilities. Mr. Alsaadi and Dr. Goldstein appear to be active
financial bloggers with little experience in running a public company
which, unlike social media, operates in a regulated environment and
requires a higher level of responsibility."
Dan Botterill, Equal's Chairman, said: "Some of Mr. Alsaadi's and Dr.
Goldstein's demands would restrict the board from exercising its
fiduciary duty to shareholders. We wish to assure all our shareholders
that we will remain accountable to them, and not to a minority of
voices interested only in financial engineering."
Equal wishes to respond specifically to several demands and misleading
allegations made by the dissidents in their press release dated
November 29, 2012:
The recent strategic review concluded that acquisitions would be
considered only as one of a variety of options. Having worked so hard
in recent years to lighten Equal's debt burden, the board and
management have no intention of taking any action that would weaken the
Equal has no plans for any major acquisition. Even so, it would be wise
to take advantage of opportunities for smaller, tuck-in transactions
that could enhance the value of the Oklahoma assets. In any case, no
acquisition would be considered that was not accretive and beneficial
A substantial share buyback would significantly weaken the company's
balance sheet, potentially leaving it dangerously exposed to swings in
the volatile natural-gas market.
The board and the company's financial advisers firmly believe that the
current strength of the balance sheet is now one of Equal's most
valuable assets. It is critical in current market conditions to
maintain a debt-to-cash flow ratio of less than 1.0, which the board
and our advisers believe can be maintained under the 2013 budget plan.
The current ratio is 0.7, but this will rise towards 1.0 with the
payment of a dividend in 2013.
As announced on November 27, 2012, Equal has initiated an annual
dividend of USD$0.20 per share. The level of the dividend payment
reflects a balance between returning as much value as possible to
shareholders while maintaining a prudent debt-to-cash flow ratio in
uncertain economic times, as outlined above.
Although the board and management are confident that natural-gas liquids
prices will maintain their recent improvement, we do not see a full
recovery until 2014.
Mr. Klapko said: "In all that we do, we are determined to ensure that we
do not take Equal back to the dark days of five years ago when its
predecessor over-extended itself by taking on too much debt. An
unsustainable dividend - as now demanded by the dissidents - was
exactly what landed the company in trouble then."
As mentioned in the November 27 release, the strategic plan includes a
review of the composition of the board and senior management team, as
well as a review of compensation policies.
More generally, management and the board have listened to Equal's
shareholders. During the course of the strategic review, a number of
models were tested by the company and its legal and financial advisors.
It became clear that the present course of action is the most realistic
path to preserve and enhance value for our shareholders.
Mr. Botterill added: "We appreciate the support we have received from
many shareholders. Equal's board and management will not allow the
distraction caused by a handful of dissidents to slow down the
execution of our strategic plan to preserve value for shareholders. We
have a fiduciary obligation to consider both short- and long-term
"Now that we have completed our strategic review, we are firmly focused
on delivering results under the 2013 business plan and on positioning
Equal to take advantage of the anticipated recovery in commodity
Further details of Equal's strategic review and its benefits can be
found at www.sedar.com.
About Equal Energy:
Equal Energy is an oil and gas exploration and production company based
in Calgary, Alberta, with its United States operations office located
in Oklahoma City, Oklahoma. Our shares and convertible debentures are
listed on the Toronto Stock Exchange under the symbols (EQU, EQU.DB.B),
and our shares are listed on the New York Stock Exchange under the
symbol (EQU). Our oil and gas assets are centered on the Hunton
liquids-rich natural gas property in Oklahoma.
Certain information in this press release constitutes forward-looking
statements under applicable securities law including payment of future
dividends, the recovery of commodity prices to more historical norms
and the reassertion of the previously outlined go-forward strategy Any
statements that are contained in this press release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements are often identified by terms
such as "may," "should," "anticipate," "expects," "seeks" and similar
Forward-looking statements necessarily involve known and unknown risks,
such as risks associated with closing the Royalties sale, assignment of
tax pools and subsequent payment, oil and gas production; marketing and
transportation; loss of markets; volatility of commodity prices;
currency and interest rate fluctuations; imprecision of reserve and
future production estimates; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to realize
the anticipated benefits of dispositions; inability to access
sufficient capital from internal and external sources; changes in
legislation, including but not limited to income tax, environmental
laws and regulatory matters. Readers are cautioned that the foregoing
list of factors is not exhaustive.
Readers are cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information,
although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ
materially from those anticipated forward-looking statements contained
in this press release are expressly qualified by this cautionary
Additional information on these and other factors that could affect
Equal's operations or financial results are included in Equal's reports
on file with Canadian and U.S. securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com), the SEC's website (www.sec.gov), Equal's website (www.equalenergy.ca) or by contacting Equal. Furthermore, the forward looking statements
contained in this news release are made as of the date of this news
release, and Equal does not undertake any obligation to update publicly
or to revise any of the included forward-looking statements, whether as
a result of new information, future events or otherwise, except as
expressly required by securities law.
SOURCE: Equal Energy Ltd.
For further information:
Chief Financial Officer
(403) 538-3580 or (877) 263-0262
President & CEO
(403) 536-8373 or (877) 263-0262
Vice-President - Kingsdale Communications Inc.
(416) 867 2304