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Re: johnlw post# 921

Friday, 06/06/2008 10:37:00 PM

Friday, June 06, 2008 10:37:00 PM

Post# of 975
Ember increases Cordero bid to $5.35 per share


2008-06-06 18:04 MT - News Release

Also News Release (C-COR) Cordero Energy Inc


Mr. Douglas Dafoe of Ember reports

EMBER RESOURCES INC. ANNOUNCES INCREASED CASH AND SHARE PROPOSAL TO ACQUIRE ALL OF THE OUTSTANDING SHARES OF CORDERO ENERGY INC.

Ember Resources Inc. has provided Cordero Energy Inc. with a further formal proposal to acquire all of the outstanding common shares of Cordero for increased consideration of $5.35 per Cordero share, payable at the election of each Cordero shareholder, in cash or 2.61 common shares of Ember, at a deemed price of $2.05 per Ember share.

The cash portion of the proposal payable to the Cordero shareholders will total $55-million. In the event that the Cordero shareholders elect, in total, to receive more than $55-million in cash, the amount of cash to be received by a holder electing to receive cash with respect to a Cordero share will be reduced proportionately and the balance of the purchase price for that Cordero share will be paid by a portion of an Ember share at a deemed price of $2.05 per Ember share. In the event that the Cordero shareholders elect, in total, to receive less than $55-million in cash, the number of Ember shares to be received by a holder electing to receive Ember shares with respect to a Cordero share will be reduced proportionately and the balance of the purchase price for that Cordero share will be paid by in cash.

The value under the proposal of $5.35 per Cordero share represents a premium of 13 per cent over the outstanding cash offer of $4.75 cash per Cordero share made by Enmax Acquisition Corp.

The proposal calls for the acquisition to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) and for the execution of a definitive arrangement agreement by June 16, 2008. The arrangement would require court approval and the approval of the holders of 66-2/3 per cent of the Cordero shares who vote at a special meeting of the holders called by Cordero to consider the transaction. The arrangement would be subject to a number of additional conditions typical to transactions of such a nature, including all applicable regulatory approvals.

To finance a portion of the cash component of the proposal, Ember has entered into subscription agreements which provide for the issuance of 21,951,221 subscription receipts at a price of $2.05 per subscription receipt for total proceeds of $45-million. The balance of the cash component will be paid out of Ember's existing credit facilities which were recently expanded to $35-million. Each subscription receipt will be convertible into one Ember share upon the completion of the arrangement with Cordero. The issuance of the subscription receipts will occur prior to the completion of the arrangement. The subscription receipt financing would require the approval of the Ember shareholders at a meeting held prior to the completion of the arrangement.

Ember has received commitment letters from shareholders representing a total of 12,396,196 Cordero shares, or approximately 33.4 per cent of the outstanding Cordero shares, pursuant to which such holders have agreed, subject to certain terms and conditions or to the receipt of a superior offer, to support Ember's acquisition of the Cordero shares and not tender their Cordero shares to the Enmax offer, which expires on Friday, June 13, 2008.

The combination of Ember and Cordero would result in a highly focused and growth-oriented coalbed methane (CBM) resource company in a natural gas pricing environment that has seen dramatic improvements over the last three months. Combining the two CBM companies would result in an excellent geographic fit of complementary assets.

Key attributes of the combined company

Focused production base:


Core operated properties of Cordero's Malmo and Buffalo Lake areas in close proximity to Ember's core operated properties of Acme, Fenn-Big Valley and Rosalind, all of which are concentrated along major CBM fairways in east-central Alberta;
Approximately 29 million cubic feet per day (4,800 barrels of oil equivalent per day) of predominately natural gas production from Horseshoe Canyon Coals (HSC) and complementary conventional sands;
525 billion cubic feet of original gas in place (OGIP) resources identified in the HSC;
Based on 2007 year-end reserves, 96 billion cubic feet of proven and 150 billion cubic feet of proven plus probable reserves, over 80 per cent of which are HSC CBM reserves;
Long-life predictable reserves with a reserve life index of 14.2 years;
High-netback natural gas production benefiting from low royalty rates and low operating costs;
450 low-risk development HSC CBM locations in current inventory to provide for immediate growth.

Significant resource upside:


Mannville contingent resources of existing Ember assets are estimated at 710 billion cubic feet. Ember estimates additional Cordero Mannville resource potential at 640 billion cubic feet resulting in a combined total resource potential of approximately 1.35 trillion cubic feet. Cordero Mannville resources are a continuation of Mannville coals at Ember's Rosalind and Fenn-Big Valley properties where Ember has conducted extensive reservoir evaluation and pilot work.
Higher production and cash flows in the combined company will make capital available to selectively evaluate Mannville resources, and as conditions dictate, move them toward commercial-stage production.

Financial strength:


Market capitalization of the combined entity of approximately $285-million;
Net asset value (present value, 10 per cent, pretax) estimated at $400-million using $9 flat AECO pricing using year-end reserve reports;
$105-million of bank lines of credit, $70-million of which is currently used;
Annualized cash flow estimated at $65-million to $70-million based on current natural gas prices.

Focused CBM resource strategy:


Combined resource base of 1.9 trillion cubic feet with significant upside for recovery of reserves from development drilling and application of existing and new extraction technologies;
Ember's management team has focused exclusively on CBM resource development and will continue to do so in the combined entity;
Immediate production growth will come from inventory of 450 low-risk drilling locations in HSC coals;
Capital will be selectively allocated to advance the commercialization of significant Mannville resources for future growth and shareholder value;
Ember is a leader in CBM development in Alberta. Ember's record in Horseshoe Canyon CBM development is among the best with 2007 proven plus probable finding, development and acquisition costs (including future capital) reported at $11.79 per barrel of oil equivalent and three-year average finding, development and acquisition costs (including future capital) for the HSC coals of $11.45 per boe.
Ember is at the forefront of technical work being conducted on the Mannville coals and has extensive experience in drilling and piloting production from this significant resource. Although not proven commercial to date, with the current stronger price environment, a royalty regime that continues to favour such development and advances in technology, it is the conviction of Ember that over time the Mannville coals will become commercial on a larger scale.

"Our revised proposal benefits all shareholders of Cordero providing cash for those who wish to crystallize their investment now while providing participation in a new CBM-focused growth company for those shareholders that elect to take Ember shares," said Doug Dafoe, chairman and chief executive officer of Ember.

FirstEnergy Capital Corp. is acting as exclusive adviser to Ember on this transaction.

We seek Safe Harbor.

K.D.