Galleon announces acquisition of ExAlta Energy Inc.


    CALGARY, Nov. 26 /CNW/ - Galleon Energy Inc. ("Galleon") is pleased to
announce that it has agreed to acquire, subject to certain conditions, by plan
of arrangement, all of the issued and outstanding shares of ExAlta Energy Inc.
("ExAlta"), for total consideration of approximately $110 million including
the assumption of approximately $47.9 million of net debt (including
associated deal costs) (the "Transaction"). Under the terms of the
Transaction, Galleon will issue, in aggregate, approximately 4.33 million
Class A common shares to shareholders of ExAlta based on an exchange ratio of
0.118 Galleon Class A common shares for each ExAlta share.
    The Transaction is accretive to Galleon on the following economic
benchmarks: production per share +8%; cash flow per share +8%; and reserves
per share +5%. This acquisition has a strong operational fit for Galleon as
over 60% of the ExAlta assets are imbedded in Galleon's major core areas in
the Peace River Arch area of Alberta. Upon completion of the Transaction,
Galleon's inventory of drillable locations will increase to over 725 locations
and its land holdings will increase by approximately 132,000 net acres.
    Pursuant to the Transaction, Galleon will acquire approximately
2,620 Boe/d (60% gas, 40% oil) with 5.9 Mmboe of proven plus probable reserves
(based on Galleon's internal estimates). The production is 80% operated and
largely comprised of light oil and natural gas proximal to Galleon's current
operations in the Peace River Arch area of Alberta.
    At Eaglesham, Galleon's drillable locations targeting light oil will
increase to 72 net locations from 40 net locations. Based on existing
opportunities, Galleon believes there is potential for growth in this core
area to over 6,000 Boe/d from current production of 2,000 Boe/d. Upon
completion of the Transaction, Gallon's land access will increase to
approximately 170 gross sections (107 net sections) in Eaglesham. Galleon has
extensive technical expertise and experience in this area.

    Excluding ExAlta's undeveloped land value of approximately $12 million,
the Transaction metrics are:

    -  Production - $37,400 per Boe based on ExAlta's 2007 third quarter
       production of approximately 2,620 Boe/d;
    -  Reserves - $16.61 per proved plus probable barrel oil equivalent;
    -  Property operating cash flow multiple - 3.5 times annualized estimated
       2008 property operating cash flow based on $75 US WTI and
       $6.00/Mcf Cdn.

    Galleon will have the following corporate characteristics upon closing of
the Transaction:

    -  High quality assets: 90% operated light oil and natural gas reserves
       and production in four core operating areas;
    -  High quality production: average estimated 2008 daily production of
       approximately 20,000 Boe/d and a forecasted 2008 exit rate of between
       22,000 and 24,000 Boe/d;
    -  Shares outstanding: 67.6 million basic, 73.6 million diluted;
    -  Significant upside: greater than 725 drilling locations with land
       access over 1 million gross acres.

    In support of the Transaction, Galleon intends to hedge approximately
1,000 barrels per day of oil production in 2008.
    The Transaction will provide ExAlta's shareholders with enhanced
liquidity and ownership in a larger, financially stronger company with
excellent growth prospects and the ability to accelerate the exploitation of
ExAlta's substantial prospect inventory. In addition, based on the closing
share prices on the Toronto Stock Exchange on November 23, 2007, the
Transaction represents a significant premium to ExAlta's share price.
    The Boards of Directors of both Galleon and ExAlta have unanimously
approved the Transaction. ExAlta's Board of Directors has concluded that the
Transaction is in the best interests of its shareholders, and has resolved to
recommend that ExAlta shareholders vote their shares in favor of the
Transaction. Closing is expected to occur in February 2008, subject to
regulatory approval, approval of ExAlta's shareholders, court approval and
certain other conditions. An information circular outlining the Transaction
will be mailed to ExAlta shareholders in connection with a meeting of
shareholders to be held in early 2008.
    Certain ExAlta shareholders, including the Board of Directors and all
officers of ExAlta, representing approximately 9.3 percent of the shares
outstanding, have entered into lock-up agreements to vote their shares in
favor of the Transaction, subject to certain exceptions. ExAlta has agreed
that it will not solicit or initiate discussions regarding any other business
combination or sale of material assets. ExAlta has also granted Galleon a
right to match competing unsolicited proposals. The agreement provides for a
$3.5 million termination fee payable to Galleon in certain circumstances if
the Transaction is not completed.
    FirstEnergy Capital Corp. is acting as exclusive financial advisor to
ExAlta with respect to the Transaction and has advised the Board of Directors
of ExAlta that it is of the opinion, as of the date hereof, and subject to
review of the final documentation, that the consideration to be received by
the ExAlta shareholders pursuant to the Transaction is fair, from a financial
point of view, to the ExAlta shareholders.
    GMP Capital LP is acting as a special advisor to Galleon with respect to
this Transaction.
    Prior to this Transaction, Galleon has approximately 63.2 million Class A
shares and 922,500 Class B shares issued and outstanding which trade on the
TSX under the symbols "GO.A" and "GO.B".

    ADVISORY: Certain information regarding Galleon and ExAlta (the
"Companies") in this news release including management's assessment of future
plans and operations, the effect of the Transaction on the Companies, timing
of matters related to the approval of the Transaction and implementation
thereof, production increases, reserves estimates, production levels, hedging
activity and future cash flow may constitute forward-looking statements under
applicable securities laws and necessarily involve risks including, without
limitation, risks associated with oil and gas exploration, development,
exploitation, production, marketing and transportation, changes to the
proposed royalty regime prior to implementation and thereafter, loss of
markets, volatility of commodity prices, currency fluctuations, imprecision of
reserve estimates, environmental risks, competition from other producers,
inability to retain drilling rigs and other services, capital expenditure
costs, including drilling, completion and facilities costs, unexpected decline
rates in wells, delays in projects and/or operations resulting from surface
conditions, wells not performing as expected, delays resulting from or
inability to obtain required regulatory approvals and ability to access
sufficient capital from internal and external sources. As a consequence,
actual results may differ materially from those anticipated in the
forward-looking statements. Readers are cautioned that the foregoing list of
factors is not exhaustive. Additional information on these and other factors
that could affect Galleon's operations and financial results are included in
reports on file with Canadian securities regulatory authorities and may be
accessed through the SEDAR website (, at Galleon's website
( Furthermore, the forward-looking statements contained
in this news release are made as at the date of this news release and Galleon
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 may be required by applicable securities

    Disclosure provided herein in respect of barrels of oil equivalent (boe)
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

For further information:

For further information: OR CONTACT: Steve
Sugianto, President and Chief Executive Officer, (403) 261-9287,; Glenn R. Carley, Executive Chairman, (403) 261-9277,; Shivon Crabtree, Vice President and Chief Financial
Officer, (403) 261-9276

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