STO.to/STRNF...Bonterra Energy Corp. Announces Offer for Spartan Oil Corp.
CALGARY, ALBERTA--(Marketwire - Dec. 11, 2012) -
Bonterra Energy Corp.("Bonterra") (TSX:BNE), is pleased to announce that it has made an offer (the "Offer") to Spartan Oil Corp. ("Spartan") pursuant to which Bonterra will acquire all of the outstanding common shares of Spartan ("Spartan Shares") in exchange for common shares of Bonterra ("Bonterra Shares") by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement"). The Arrangement will result in a dominant Cardium focused light oil producer with interests in the Greater Pembina area of Alberta.
While negotiations are ongoing, a binding agreement has not yet been signed. Therefore there can be no assurance that any transaction will result from these discussions, or as to the timing, structure or terms of any transaction.
The merger of Bonterra's and Spartan's asset bases is of strong strategic value for both of their respective shareholders as the resulting company will have one of the premier light-oil assets concentrated in the Pembina region, which will be comprised of a complimentary production base and a long-term inventory of drilling opportunities that is anticipated to drive future growth. The merger of Spartan and Bonterra is a unique opportunity for Spartan shareholders to participate, through their approximately 35% ownership, in an established dividend paying company that has demonstrable history of per share production and dividend growth through a variety of commodity cycles. The merger is anticipated to be accretive for Bonterra on a financial and operating basis and Bonterra expects to continue to demonstrate production per share growth and cash flow per share growth while maintaining a strong balance sheet.
Transaction Summary
•Pursuant to the Offer, Spartan shareholders will receive consideration of 0.1169 Bonterra Shares for each Spartan Share held (the "Exchange Ratio"). Based on Bonterra's 30-day average closing price of $43.05, the implied price per Spartan Share is $5.03. •As a part of the Arrangement, Bonterra has committed, subject to the execution of the definitive agreement and completion of the Arrangement, to increase its monthly dividend to $0.28 from $0.26 beginning March 2013. Subject to the transaction closing prior to February 15, 2013, Spartan shareholders will also receive a $0.26 per Bonterra share dividend on February 28, 2013. If Bonterra sustains its current effective yield of 7.2% following the dividend increase, Spartan shareholders can potentially realize an incremental $0.43 of value per Spartan Share. This amount, combined with the above share consideration, represents a 28% premium over the implied value of Spartan's share price of $4.27 (as calculated by using the previous bidder's closing price as at December 7, 2012 and the previous bidder's proposed exchange ratio). •Based on the Exchange Ratio, it is currently anticipated that Bonterra will issue approximately 10.7 million Bonterra Shares to the holders of Spartan Shares. Transaction Rationale
•Bonterra is one of the premier dividend paying companies in the western Canadian sedimentary basin and has increased its monthly dividend from 12 cents to 26 cents over the past four years. The combination of Spartan and Bonterra is a strategic consolidation opportunity that is expected to benefit both sets of shareholders. Bonterra, as demonstrated by its past track record of year-over-year growth on a per share basis, has shown a strong ability to manage Pembina Cardium assets to provide measured production growth while providing a sustainable dividend to its shareholders. •Combined, Bonterra and Spartan would become one of the dominant light oil producers in the Pembina area with a strong asset position of low-risk development drilling opportunities. It is anticipated that the resulting company will have the following characteristics: ?A combined, sustainable, high-netback, production profile of approximately 11,500 BOE/D (approximately 75% liquids weighting), post declines from flush production (with Bonterra initially producing approximately 8,200 BOE/D and Spartan initially producing approximately 4,500 BOE/D) ?A strong balance sheet with an expected Debt / 2013 Cash Flow of approximately less than 1.1x ?A scalable, high quality, multi-year drilling inventory in excess of 10 years (assuming 4 wells per section), in the heart of the Pembina area •It is anticipated that the Spartan shareholders, through their approximately 35% ownership in Bonterra post-Arrangement, will continue to realize further value creation through a measured production growth profile and a growth-oriented dividend policy. Financial Advisory
AltaCorp Capital Inc. is acting as financial advisor to Bonterra in connection with the Offer.
CAUTIONARY STATEMENTS
The term barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil. http://www.marketwire.com/press-release/bonterra-energy-corp-announces-offer-for-spartan-oil-corp-tsx-bne-1736110.htm
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