Canadian Oil

[Tackler]

Deer Creek receives $1.35-billion Total takeover offer

2005-08-02 11:33 ET - News Release

Mr. Glen Schmidt reports

DEER CREEK ENERGY LIMITED ANNOUNCES SALE TO TOTAL E&P CANADA LTD. FOR APPROXIMATELY $1.35 BILLION

Deer Creek Energy Ltd. has entered into an agreement pursuant to which Total E&P Canada Ltd., a wholly owned direct subsidiary of Total S.A., will make an all-cash offer to acquire all of the issued and outstanding common shares on a fully diluted basis of Deer Creek by way of a takeover bid. Under the offer, Total will acquire the shares at a price of $25 per share, valuing the proposed transaction at approximately $1.35-billion. The offer represents a 45-per-cent premium to Deer Creek's shareholders based on the weighted average closing price of Deer Creek's common shares on the TSX for the 20 previous days ending July 29, 2005, and a 39-per-cent premium over Friday's closing price of $18. The offer will be subject to certain conditions, including acceptance of the offer by holders of at least 66-2/3 per cent of the outstanding common shares of Deer Creek calculated on a fully diluted basis, and receipt of all required regulatory approvals.

The board of directors of Deer Creek has unanimously approved the proposed transaction and has concluded the transaction is in the best interests of its shareholders and will recommend that its shareholders accept the offer. Goldman, Sachs & Co. and Peters & Co. Ltd. acted as financial advisers for Deer Creek and have provided the board of directors of Deer Creek with their opinions that the consideration under the offer is fair from a financial point of view to the holders of Deer Creek common shares.

Deer Creek has agreed to pay Total a non-completion fee of $40-million in certain circumstances if the transaction is not completed. The agreement includes customary non-solicitation covenants. Full details of the offer will be included in the formal takeover bid circular and related documents, which will be mailed to all shareholders of Deer Creek on or about Aug. 5, 2005, and in any event no later than Aug. 17, 2005. The offer, unless extended, will expire 35 days thereafter, with anticipated closing in September, 2005. The directors and certain major shareholders, representing approximately 32.3 per cent of the issued and outstanding shares of Deer Creek on a fully diluted basis, have agreed to tender their shares, subject to certain exceptions, and have entered into lock-up agreements with Total evidencing such commitment.