Argent Energy Trust announces closing of bought deal convertible debenture financing
04 Jun, 2013, 08:50 ET
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
CALGARY, June 4, 2013 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") (TSX: AET.UN) is pleased to announce that it has completed its previously announced bought deal financing of $75,000,000 aggregate principal amount of 6.00% convertible unsecured subordinated debentures due June 30, 2018 (the "Debentures") at a price of $1,000 per Debenture for aggregate gross proceeds of $75,000,000 (the "Offering"). The syndicate of underwriters was co-led by Scotiabank, CIBC and RBC Capital Markets, and included TD Securities Inc., BMO Capital Markets, National Bank Financial Inc., Canaccord Genuity Corp. and FirstEnergy Capital Corp. (collectively, the "Underwriters").
The Underwriters have been granted an over-allotment option, exercisable in whole or in part for a period of 30 days from closing of the Offering, to purchase up to an additional $11,250,000 aggregate principal amount of Debentures. If the over-allotment option is fully exercised by the Underwriters, aggregate gross proceeds from the Offering will be approximately $86,250,000.
The Debentures bear interest at a rate of 6.00% per annum, payable semi-annually in arrears on June 30 and December 31 in each year commencing on December 31, 2013, and mature on June 30, 2018. The Debentures are convertible at the holder's option into trust units of Argent (the "Units") at any time prior to the business day immediately preceding the earlier of the maturity date and the date fixed for redemption at a conversion price of $13.90 per Unit, subject to adjustment in certain circumstances and satisfaction of certain conditions.
The Debentures are not redeemable before June 30, 2016. On or after June 30, 2016 and at any time prior to maturity, the Debentures may be redeemed at the Trust's option in whole or in part from time to time, at a price equal to their principal amount plus accrued and unpaid interest, provided that the volume weighted average trading price of the Units on the Toronto Stock Exchange ("TSX") for the 20 consecutive trading days ending on the fifth trading day preceding the date on which notice of redemption is given is not less than 125% of the conversion price.
The Trust plans to accelerate the development of the Trust's Eagle Ford acreage in both Gonzales and Fayette counties in Texas, given the positive results of the three Eagle Ford wells the Trust has drilled to date. The Trust believes it has approximately 180 Eagle Ford development locations on these lands. The net proceeds of the Offering will initially be used to repay the entire amount outstanding under Argent's credit facility, which was primarily incurred in connection with the acquisition of the Trust's assets and capital expenditures since the completion of the Trust's initial public offering. The remainder of the net proceeds, and advances from time to time under the credit facility will be used to (i) increase the Trust's 2013 capital expenditure program to $85 million from $41 million, with the majority of the expenditures and associated new Eagle Ford drilling production to occur in the third and fourth quarters of 2013; and (ii) for other ongoing working capital and general corporate purposes. The transition from Austin Chalk to Eagle Ford drilling will result in Q2 production in line with Q1 and still maintains the Trust's 2013 average production guidance of 5,500 boe/d to 5,600 boe/d. This plan will result in an estimated increased 2013 exit production rate of 6,300 boe/d.
No securities regulatory authority has either approved or disapproved of the contents of this news release. The securities being offered have not, and will not be, registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States unless pursuant to an exemption therefrom. This press release is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of Argent Energy Trust in any jurisdiction.
About Argent Energy Trust
Argent is a "mutual fund trust" under the Income Tax Act (Canada). Argent's objectives are to create stable, consistent returns for investors through the acquisition and development of oil and natural gas reserves and production with low-risk exploitation potential, located primarily in the United States, and to pay out a portion of available cash to holders of the Trust's Units on a monthly basis. Further information pertaining to Argent, the Units and the Debentures may be found on www.sedar.com or www.argentenergytrust.com.
Argent's units are traded on the TSX under the symbol AET.UN. The Debentures will be listed today on the TSX under the symbol AET.DB.
Forward Looking Information
This press release includes forward-looking information within the meaning of applicable Canadian and United States securities legislation. All statements, other than statements of historical facts, that address activities, circumstances, events, outcomes and other matters that Argent budgets, forecasts, plans, projects, estimates, expects, believes, assumes or anticipates (and other similar expressions) will, should or may occur in the future, are considered forward-looking information. In particular, forward-looking information contained in this press release includes, but is not limited to, the use of proceeds from the Offering; the number of drilling development locations; capital expenditure plans and timing; and expected future production.
In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The recovery and reserve estimates of the Trust's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. The forward-looking information provided in this press release is based on management's current beliefs, expectations and assumptions, based on currently available information as to the outcome and timing of future events. Argent cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking information is subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas.
These risks include, but are not limited to, oil and natural gas price volatility, Argent's access to cash flows and other sources of liquidity to fund its capital expenditures, its level of indebtedness, its ability to replace production, the impact of the current financial climate on Argent's anticipated business and financial condition, a lack of availability of or increases in costs of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, economic conditions and other risks as described in documents and reports that Argent files with the securities commissions or similar authorities in applicable Canadian jurisdictions on the System for Electronic Document Analysis and Retrieval (SEDAR). Any of these factors could cause Argent's actual results and plans to differ materially from those contained in the forward-looking information.
Forward-looking information is subject to a number of risks and uncertainties, including those mentioned above, that could cause actual results to differ materially from the expectations set forth in the forward-looking information. Forward-looking information is not a guarantee of future performance or an assurance that our current assumptions and projections are valid. All forward-looking information speaks only as of the date of this press release, and Argent assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking information, except as required by law. You should not place undue reliance on forward-looking information. You are encouraged to closely consider the additional disclosures and risk factors contained in Argent's periodic filings on SEDAR that discuss in further detail the factors that could cause future results to be different than contemplated in this press release.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio of six Mcf to one bbl may be misleading as an indication of value.
SOURCE: Argent Energy Trust
For further information:
For further information concerning this press release, please contact:
Co-Chief Executive Officer and President
Argent Energy Trust
Chief Financial Officer
Argent Energy Trust
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