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Toronto Stock Exchange Symbol "TOG"
Toronto Stock Exchange Symbol "BD"
CALGARY, Dec. 6 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the
"Company") (TOG - TSX) and Bulldog Resources Inc. ("Bulldog") (BD - TSX) are
pleased to announce that they have entered into an arrangement agreement (the
"Arrangement Agreement") pursuant to which TriStar will acquire all of the
issued and outstanding common shares of Bulldog (the "Bulldog Shares") (the
"Proposed Transaction") by way of a plan of arrangement under the Business
Corporations Act (Alberta) (the "Arrangement"). Under the terms of the
Arrangement Agreement, TriStar will issue 0.59 common shares of TriStar (the
"TriStar Shares") for each Bulldog Share, representing an "at market" merger
based on the 10 day weighted average trading prices of both companies.
Bulldog's assets are focused in TriStar's core area of southeast
Saskatchewan and are comprised of more than 2,200 boepd of high quality light
oil, 85 percent operated. Approximately 75 percent of Bulldog's production is
produced from Fertile, a large, operated, light oil (36 degree API) pool.
TriStar believes that the Fertile pool contains more than 82 million barrels
of oil in place on Bulldog's lands with less than two percent recovered to
Bulldog's reserve report dated September 30, 2007 contains 5.2 mmboe of
proven plus probable reserves. The Fertile pool (50 percent working interest)
represents 4.0 mmboe in this reserve report equating to an 11 percent recovery
factor (inclusive of 1.3 mmboe produced to date from the pool). TriStar has
identified 83 (41.5 net) development locations to be drilled in this pool
which are not currently reflected in Bulldog's September 30, 2007 reserve
report. TriStar believes that these additional locations represent unrisked
upside potential of 6.1 mmboe of reserves net to TriStar at an estimated
capital cost of $41.5 million (implied finding and development cost of less
than $7.00 per boe and a recycle ratio of greater than eight times based on
Bulldog's top ranked operating netbacks of $56.98 in the third quarter of
2007). The addition of this unbooked upside would result in an implied
ultimate recovery factor for Fertile of approximately 27 percent. TriStar
management believes that numerous analog pools in southeast Saskatchewan,
similar in nature to Fertile, will ultimately reach recovery factors of up to
In addition, as part of the Proposed Transaction, TriStar gains exposure
to an additional 10 net sections of Bakken prone acreage. TriStar has
identified 40 net Bakken drilling locations on Bulldog's acreage, which are
not currently recognized in the Bulldog September 30, 2007 reserve report.
TriStar believes this represents unrisked upside potential of more than
4.0 mmboe of reserves, net to TriStar.
Bulldog's remaining assets are located in southeast Saskatchewan and
generally represent the working interest of assets that were acquired jointly
between TriStar and Bulldog in January 2007 including interests at Arcola,
Browning, Crystal Hill, Handsworth and Stoughton.
With the closing of the previously announced acquisition of Kinwest
Corporation (the "Kinwest Transaction") and the Proposed Transaction (together
the "Transactions"), TriStar will have exposure to 90 net sections of land on
the Southeast Saskatchewan Bakken light oil play representing more than
350 net Bakken drilling locations based on four wells per section. This land
position and drilling inventory ranks TriStar as one of the top three
participants in the exciting, emerging southeast Saskatchewan Bakken play.
Post the closing of the Transactions, TriStar will have greater than
8,000 boepd of long life, light oil production in its Southeast Saskatchewan
core area. In addition, TriStar will have more than 1,100 (600 net) future
development drilling locations for both conventional and Bakken light oil
representing potential future capital expenditures net to TriStar of
$850 million, providing an extensive production and opportunity base which
will not be affected by the recently announced royalty changes in Alberta.
Brett Herman, President and Chief Executive Officer of TriStar commented,
"We are excited about the combination with Bulldog. Fertile represents one of
the most impressive conventional discoveries in southeast Saskatchewan in the
past 15 years. The pool is a high quality, large oil in place pool that is
early in its productive life and has very attractive future drilling economics
with tremendous upside potential. In addition, the combination further expands
our Bakken position and solidifies our position as a top player in southeast
Ken McKay, President and Chief Executive Officer of Bulldog added, "We
are extremely pleased to be merging with TriStar. Bulldog has experienced
tremendous success over the past two years growing from 180 boepd to over
2,200 boepd. With this combination, our shareholders have the opportunity to
continue to participate in the development of the Fertile pool while gaining
exposure to a larger producing asset base, exciting new project
diversification, and an extended income tax horizon as a result of a larger
tax pool base. TriStar's experienced management and technical team is an
excellent group committed to efficient growth."
The parameters relating to the Proposed Transaction are set forth as
1. Purchase Price: ~C$205 million (including assumed debt)
2. Large Oil in Place:
- TriStar believes the Fertile pool has greater than 82 million
barrels of original oil in place on Bulldog lands;
less than 2 percent recovered to date
- 5.2 mmboe (proven plus probable) reserves booked as at
September 30, 2007 (4.0 mmboe booked to the Fertile property
representing an 11 percent recovery factor)
- Potential ultimate recovery factor of greater than 27 percent
representing unrisked upside of approximately 6.1 mmboe of
reserves, net to TriStar
3. High Quality Production:
- greater than 2,200 boepd (operating netback of $56.98 in Q3/07)
4. Net Operating Income Multiple:
- 4.8 times (at US$75/bbl WTI and C$6.75 MCF AECO pricing)
5. Significant Drilling Upside Potential (not reflected in the Bulldog
- Fertile: 83 gross/41.5 net
- Bakken: 100 gross/40 net
- Other: 13 gross/6.5 net
6. Other Key Attributes
- greater than 85 percent operated assets
- Land - more than 10 net sections of Bakken prone acreage; more
than 55,000 net acres of total undeveloped land
- greater than 48 square km of 3-D seismic survey
MANAGEMENT AND BOARD RECOMMENDATIONS
The Boards of Directors of both Bulldog and TriStar have unanimously
approved the Proposed Transaction. Bulldog's Board has concluded that the
Proposed Transaction is in the best interests of its shareholders, and has
resolved to recommend that holders of Bulldog Shares vote their securities in
favour of the Proposed Transaction. The Arrangement Agreement contains a
mutual non-completion fee of $8 million, which is payable by Bulldog or
TriStar to the other, as the case may be, in certain circumstances if the
Arrangement is not completed.
The Board of Directors and management of Bulldog, representing 23 percent
of the fully diluted shares outstanding have entered into lock-up agreements
to vote their securities in favour of the Proposed Transaction. It is
anticipated that a meeting of Bulldog shareholders will be held in late
January to approve the Proposed Transaction. Closing is expected to occur in
February 2008, subject to regulatory approval, approval of the Bulldog
shareholders and certain other conditions.
Tristone Capital Inc. ("Tristone") is acting as financial advisor to
Bulldog in respect of the Arrangement. Tristone has advised the board of
directors of Bulldog that they are of the opinion, as of the date hereof, that
the consideration to be received by the Bulldog shareholders pursuant to the
Arrangement is fair, from a financial point of view, to Bulldog shareholders.
Macquarie Capital Advisors is acting as financial advisor, and GMP
Securities L.P. is acting as strategic advisor to TriStar in connection with
PRO FORMA OVERVIEW; UPWARD REVISION TO TRISTAR 2008 GUIDANCE
Upon completion of the Proposed Transaction, which is scheduled to close
in February 2008, and the previously announced Kinwest Transaction, which is
scheduled to close in January 2008, TriStar anticipates revising upward
management's previously announced 2008 guidance to average 16,250 boepd with
an exit rate of 16,750 boepd.
TriStar now anticipates 2008 average daily production of more than
18,250 boepd with a 2008 production exit rate of more than 19,250 boepd based
on an anticipated revised capital expenditure budget of $190 million.
Upon the closing of the Proposed Transaction and the Kinwest Transaction,
TriStar estimates it will have the following corporate characteristics:
High Quality Assets: Top-decile netback, 85 percent operated,
light oil and natural gas reserves and
production focused in four core operating
Long Life Reserves: greater than 56 mmboe (P+P);
RLI of over 8.5 years
High Quality Production: Average Rate 2008
(E) greater than 18,250 boepd
(greater than 70% light oil)
Exit Rate 2008
(E) greater than 19,250 boepd
(greater than 70% light oil)
Estimated Net Debt: less than $275MM;
less than 1.3 times cash flow
(US$75 WTI, $6.75 AECO)
Shares Outstanding: 93.0 MM (B); 95.6 MM (FD)
Significant Upside Potential: greater than 1,500 development locations
greater than 750,000 net acres of
In conjunction with the transaction, a put contract locking in a minimum
price of US $75.00/bbl has been entered into for 500 bbls per day for a period
of February 1, 2008 to December 31, 2009.
TriStar Oil & Gas Ltd. is a Calgary based company active in the
acquisition, exploration, development and production of crude oil and natural
gas in Western Canada.
Bulldog Resources Inc. is a Calgary based company active in the
acquisition, exploration, development and production of crude oil and natural
gas in Western Canada.
Warning about Forward-Looking Statements
This press release contains forward-looking statements. More
particularly, this press release contains statements concerning the potential
reserves, oil in place, production and drilling locations associated with the
announced acquisitions, TriStar's projected average annual and exit rates of
production of oil and natural gas for 2008 and estimated net debt following
closing of the announced acquisitions.
The forward-looking statements are based on certain key expectations and
assumptions made by TriStar, including expectations and assumptions concerning
prevailing commodity prices and exchange rates, availability and cost of
labour and services, the timing of receipt of regulatory approvals, the
performance of existing wells, the success obtained in drilling new wells, the
performance of new wells and the sufficiency of budgeted capital expenditures
in carrying out TriStar's planned activities.
Although TriStar believes that the expectations and assumptions on which
the forward-looking statements are based are reasonable, undue reliance should
not be placed on the forward-looking statements because TriStar can give no
assurance that they will prove to be correct. Since forward-looking statements
address future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks. These
include, but are not limited to, the risks associated with the oil and gas
industry in general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve
estimates; the uncertainty of estimates and projections relating to
production, costs and expenses, and health, safety and environmental risks),
commodity price and exchange rate fluctuations and uncertainties resulting
from potential delays or changes in plans with respect to exploration or
development projects or capital expenditures. These risks are set out in more
detail in TriStar's annual information form for the year ended December 31,
2006, which can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made
as of the date hereof and TriStar undertakes no obligation to update publicly
or revise any forward-looking statements or information, whether as a result
of new information, future events or otherwise, unless so required by
applicable securities laws.
Meaning of Certain Terms
When used in this press release, boe means a barrel of oil equivalent on
the basis of 1 boe to 6 thousand cubic feet of natural gas. Boepd means a
barrel of oil equivalent per day.
Boe's may be misleading, particularly if used in isolation. A boe
conversion ratio of 1 boe for 6 thousand cubic feet of natural gas is based on
an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy the securities in any jurisdiction. The common
shares offered have not and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or any state
securities laws and many not be offered or sold in the United States except in
certain transactions exempt from the registration requirements of the U.S.
Securities Act and applicable states securities laws.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information:
For further information: Brett Herman, President & Chief Executive
Officer, TriStar Oil & Gas Ltd., (403) 268-7800; or Jason Zabinsky, Vice
President, Finance & Chief Financial Officer, TriStar Oil & Gas Ltd., (403)
268-7800; or Ken McKay, President & Chief Executive Officer, Bulldog Resources
Inc., (403) 266-6902