/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
CALGARY, March 27 /CNW/ - (TSX-RRZ) Rider Resources Ltd. ("Rider" or the
"Company") today announced that it has entered into an agreement to acquire
certain oil and natural gas interests in the West Central Alberta areas of
Wapiti South and Ferrier. The Acquisition has an effective date of February 1,
2007 and is expected to close on or about May 15, 2007, with the closing being
subject to customary industry conditions. Rider's total consideration under
the agreement is $208.0 million, subject to normal closing adjustments, and
will be financed through a concurrently announced equity offering, as well as
increased available credit facilities, both as described below.
This Acquisition is a unique high-quality, high netback natural gas
opportunity which allows the Company to expand its exploration and development
program in West Central Alberta.
The key attributes of this Acquisition are:
- Current production of approximately 4,000 boe per day. In order to
maximize reserve recovery, Rider intends to restrict production in
the Ferrier area resulting in total production of about 3,600 boe per
day (comprised of 17.0 mmcf per day of natural gas and 770 bbls per
day of natural gas liquids).
- Operating costs of $3.25 per boe resulting in strong netbacks.
- Proved plus probable reserves, as estimated by the Company's
independent engineering firm, Paddock Lindstrom and Associates
("PLA") of approximately 8.1 million boes proven and 11.9 million
boes proven plus probable.
- Large contiguous land blocks adjacent to Rider's core regions which
will add approximately 44,000 net undeveloped acres and increases
Rider's net undeveloped land base by 40 per cent to 152,000 net
- Ownership in two major gas processing facilities in Wapiti South.
The undeveloped land, seismic data, and processing income assocated with
the Acquisition have an aggregate value of about $21.0 million. The estimated
closing adjustments from February 1, 2007 to May 15, 2007 are $8.0 million.
The resulting net acquisition cost of $179.0 million results in attractive
on-stream costs of $49,720 per producing boe based on 3,600 boe per day of
production, and a proved plus probable reserve addition cost, based on PLA's
reserve estimate, of $21.85 per boe proven and $15.05 per boe proven plus
The Wapiti South area is adjacent to Rider's lands in the Karr and
Waskahigan areas of Alberta. The interest being acquired has current
production of approximately 2,800 boe per day (12.7 mmcf per day of natural
gas and 650 bbls per day of natural gas liquids). The acquisition also
includes 143,940 gross acres (57,620 net) of land of which 41,199 net acres is
undeveloped. As well Rider will acquire an ownership interest in two
significant natural gas plants in the area which allow low cost processing of
future natural gas volumes. Rider has identified 14 drilling locations and
many recompletion opportunities in Wapiti South. Certain portions of the
Acquisition in Wapiti South are subject to Rights of First Refusal.
In the Ferrier area, the Company is acquiring an additional 65 per cent
interest in a well in which Rider currently has 22 per cent working interest.
With this acquisition the Company will own 87 per cent of the well and
associated undeveloped acreage and will assume operatorship. The well's total
production is currently 2,000 boe per day. Rider believes prudent operations
of this well will require the well's production rate be reduced in order to
maximize recovery of the reserves. This well was drilled in 2004 into the
Banff formation and to date has produced over 10 bcf of natural gas.
Rider forecasts 2007 average production to be approximately 12,000 boe
per day, assuming a May 15, 2007 closing date and estimated total production
at closing to be 13,600 boe per day.
In conjunction with the Acquisition, Rider has entered into an agreement
with a syndicate of underwriters led by FirstEnergy Capital Corp. and
including GMP Securities LP, Tristone Capital Inc., Scotia Capital Inc. and
Orion Securities Inc. (collectively, the "Underwriters"), pursuant to which
the Underwriters have agreed to purchase for resale to the public, on a bought
deal basis, 7,500,000 subscription receipts for common shares of Rider (the
"Subscription Receipts") at a price of $7.25 per Subscription Receipt for
aggregate gross process of $54.375 million.
Each Subscription Receipt will represent the right to receive one common
share of Rider, without the payment of any additional consideration, on the
closing of the Acquisition. The proceeds from the offering of Subscription
Receipts will be deposited in escrow pending the closing of the Acquisition.
If the Acquisition closes on or before June 30, 2007, the net proceeds from
the offering of the Subscription Receipts will be released to Rider and used
by Rider to pay a portion of the Acquisition price.
The Subscription Receipt offering is subject to certain conditions
including normal regulatory approvals. The Subscription Receipts will be
offered in certain provinces of Canada by way of a short form prospectus. The
closing of the Subscription Receipt offering is expected to occur on or about
April 19, 2007.
As part of the acquisition, Rider's credit facilities will be increased
to $230 million. Scotia Capital has also provided an equity bridge facility of
$110 million which can be utilized for this transaction. In addition, Scotia
Capital has been retained to market an issue of US$100 million Second Lien
Term Debt. It is expected that the bridge facility will not be totally
utilized due to the concurrently announced equity financing and will be
replaced with long term debt shortly after closing.
FirstEnergy Capital Corp. and Scotia Waterous have acted as financial
co-advisors on this transaction.
Rider will host a conference call today at 8am Mountain Daylight Time
(10 am Eastern Daylight Time). The call in numbers are 410-9171 for Calgary
callers and 1-866-542-4238 for all other callers. The call will be available
for replay after it's completion at 1-800-408-3053 with code 3218830.
This News Release is not an offer to sell or a solicitation of offers to
by the Subscription Receipts in the United States. The Subscription Receipts
have not been and will not be registered under the United States Securities
Act and may not be offered or sold in the United States except in transactions
exempt from such registration.
Rider is an independent Canadian oil and natural gas exploration,
development and production company with its common shares trading on the
Toronto Stock Exchange under the symbol "RRZ".
FORWARD LOOKING STATEMENTS
Certain information regarding the Company in this news release including
management's assessment of future plans and operations, production estimates,
drilling inventory and wells to be drilled, timing of drilling and tie-in of
wells, productive capacity of new wells, capital expenditures and the timing
thereof, 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, 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, the timing and length of plant turnarounds
and the impact of such turnarounds and the timing thereof, delays resulting
from or inability to complete the transaction or obtain required regulatory
approvals and ability to access sufficient capital from internal and external
sources. As a consequence, the Company's actual results, performance or
achievements could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly no assurance can be given
that any events anticipated by the forward-looking statements will transpire
or occur, or, if any of them do so, what benefits the Company will derive
Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that could
affect the Company's operations and financial results are included in reports
on file with Canadian securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com), and the Company's website
(www.riderres.com). Furthermore, the forward-looking statements contained in
this news release are made as at the date of this news release and the Company
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
BOE Disclosure: 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 wellhead.
For further information:
For further information: Craig W. Stewart, President and Chief Executive
Officer, (403) 781-2445; or John W. Ferguson, Vice President, Chief Financial
Officer, and Corporate Secretary, (403) 781-2446