Compton Petroleum to acquire Win Energy for $24-million
2007-09-17 04:12 MT - News Release
Also News Release (C-WNR) Win Energy Corp
Mr. E.G. Sapieha of Compton reports
COMPTON PETROLEUM CORPORATION TO ACQUIRE WIN ENERGY CORPORATION
Compton Petroleum Corp. will acquire, by way of a statutory plan of arrangement, all of the issued and outstanding common shares of Win Energy Corp., for cash consideration of 37 cents per common share and all of the issued and outstanding warrants of Win for cash consideration of one cent per warrant. The total value of the transaction is approximately $24-million (before transaction costs).
"We are pleased to announce the proposed acquisition of Win," said Ernie Sapieha, president and chief executive officer of Compton. "This transaction fits with our strategy of continued growth in our core areas and our focus on unconventional natural gas resource plays. The acquisition of Win creates significant operational synergies at Callum/Cowley and represents a strategic complement to Compton's Callum property -- a thrusted, overpressured unconventional gas play. With the acquisition, we will nearly double our acreage position to 223 sections in this core future growth property, and will result in Compton having the dominant land and infrastructure position on the Callum/Cowley trend."
Robert Iverach, chairman of Win, added, "Compton, with its existing strong presence in the area and expertise in the development of these complex reservoirs, is the logical company to acquire Win."
Transaction highlights:
* Win has 68,000 gross (53,600 net) acres of undeveloped land in Alberta and 93,600 gross (79,000 net) acres of exploratory land on a 10-year lease in Montana. The Cowley lands in Alberta are concentrated on the same thrusted Belly River trend as Compton's Callum area to the north.
* Win has 100-per-cent ownership of a one-year-old, 10,000-cubic-foot-per-day sweet gas plant in the Cowley area, approximately 22 miles south of Compton's Callum gas plant. This plant has been designed for easy expansion to 20 million cubic feet per day with the installation of compression, and the primary pipeline infrastructure is in place, with a 35-kilometre six- and eight-inch trunk line system through three townships of Win and Compton interest lands. The plant is currently processing approximately four million cubic feet per day of Win and third party gas, with potential for future growth of processing revenues due to its strategic location. The cost of the plant was approximately $8-million.
* Additionally, Win has a strategic proprietary interest in 55 kilometres of 2-D seismic and a new 36-square-mile 3-D seismic survey surrounding the best producing wells on the Win lands. Only Win's newest well has been drilled on this 3-D survey, which will allow for optimal placement of future well locations over the most prolific areas in the complex thrust belt. The seismic was shot in late 2006 at a cost in excess of $3-million.
* Compton has completed an internal evaluation of the proved-plus-probable reserves of the existing producing wells only, effective Sept. 1, 2007, and has ascribed 353,000 barrels of oil equivalent to the Cowley property. The resultant reserve acquisition metrics (net of undeveloped land, seismic and the gas plant value) are $28.19 per barrel of oil equivalent.
* The corresponding production acquisition metric (net of undeveloped land, seismic and the gas plant value) is $45,200 per barrel of oil equivalent per day, based on Win's current production of approximately 220 barrels of oil equivalent per day (1.2 million cubic feet per day and 20 barrels per day of high-quality condensate).
* Win has income tax pools of approximately $52-million.
Upon completion of the transaction, Compton will become the dominant operator of the Foothills Belly River trend from Township 6 to Township 14 W5M. In this capacity, Compton will continue to work with local residents and stakeholders to ensure that Compton employs the high standards of environmental protection and sustainable development that have been the hallmark of both Win's and Compton's operations in this area of the province. As a result of the extensive research that Compton has conducted on its Callum property, the impact of future development on Win's lands will continue to be minimized through multiwell pads and horizontal drilling to effectively develop the unconventional gas resources of this area.
Management and board recommendations
The transaction will be carried out by way of a statutory plan of arrangement. Win anticipates mailing a proxy circular relating to the transaction before Oct. 5, 2007, to shareholders and warrantholders of record for a meeting to be held on Nov. 22, 2007. The transaction will be subject to certain conditions, including the approval of 66-2/3 per cent of the votes cast by shareholders and warrantholders of Win at the meeting, receipt of all regulatory and court approvals and other customary conditions. In addition, Win has agreed that it will not solicit or initiate discussions or negotiations with any third party for any takeover bid or other business combination involving Win and Compton has the right to match any unsolicited competing proposals. Under certain circumstances, Win has agreed to pay a non-completion fee of $1-million to Compton.
The transaction has the support of the board of directors of both Compton and Win. Jennings Capital Inc. acted as exclusive financial adviser to Win and has provided Win's board of directors with its verbal opinion, subject to review of final documentation, that the consideration to be received in the transaction is fair from a financial point of view to the shareholders and warrantholders of Win. The board of directors of Win has unanimously approved the transaction and has concluded that it is in the best interests of Win and is unanimously recommending that shareholders and warrantholders of Win vote in favour of the transaction. Major shareholders and warrantholders of Win, including directors and officers, representing at least 18 per cent of the outstanding shares and warrants of Win, have agreed to enter into support agreements with Compton, whereby they will vote their shares and warrants in favour of the transaction.
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