Click here to close now.

Welcome!

.NET Authors: Pat Romanski, Elizabeth White, Liz McMillan, Jaynesh Shah, Carmen Gonzalez

News Feed Item

Equal Energy Concludes Strategic Review Process: Announces New Dividend and Sale of Royalty Assets

CALGARY, Alberta, Nov. 27, 2012 /PRNewswire/ - Equal Energy Ltd. (TSX: EQU) (NYSE: EQU) announced several important initiatives today stemming from its recently-concluded strategic review process.

Highlights include:

  • An agreement to sell Equal's remaining royalties and fee title lands in Western Canada to Keystone Royalty Corp. for $11.4 million in cash.
  • Initiation of a USD$0.20 per share annual dividend, starting on January 1, 2013.
  • A review of the composition of the board of directors and senior management team.
  • A review of compensation policies.
  • A major reduction in debt as a result of recent asset sales.
  • A focus on the liquids rich, natural gas Hunton property in Central Oklahoma.
  • Consideration of significant future acquisitions.

Equal also released details of its 2013 operating and capital budget, including a modest, year-over-year increase in liquids rich, natural gas production from the Central Oklahoma assets, an estimated cash flow of $33 million, and a $36 million capital budget.

"Our shareholders and other stakeholders have spoken, and we have listened", Don Klapko, Equal's President said. "The strategic review and the plan we are announcing today greatly strengthen our company. We believe the new dividend is well within our financial resources. Our balance sheet is strong with approximately $150 million of cash and borrowing capacity combined."

Mr. Klapko added: "We are now in a position to consider significant accretive acquisitions providing additional growth opportunities. Furthermore, continued recovery in natural gas and natural gas liquids pricing provides significant additional upside."

Sale of Royalty Assets:

Under an agreement with Keystone Royalty Corp., Equal will sell its royalties and fee title lands in Western Canada for $11.4 million in cash. Equal has also agreed to assign residual resource income tax pools to Keystone under the provisions of the Canadian Income Tax Act for $0.75 million in cash. The effective date of the agreement is October 1, 2012 and closing is scheduled for December 13, 2012. The date of the assignment of the income tax pools has not been determined.

Equal will add the proceeds from the sale of the royalties and fee title lands to cash reserves, resulting in an estimated $22 million in cash at year-end 2012. Net debt at year-end 2012 will total approximately $23 million, including outstanding convertible debentures. Equal's credit facility has been adjusted to $125 million secured against the borrowing base of its Central Oklahoma assets. The royalties and fee title lands were Equal's last remaining Canadian assets and the company is currently winding down its Canadian operations.

Conclusion of Strategic Review:

The strategic review process that began on May 3, 2012 is now complete. Dan Botterill, Equal's chairman, said: "We are pleased to have brought the review to a successful conclusion. We are confident that the measures now being put in place herald an even brighter future for Equal."

Mr. Botterill added that, as part of the process, the board will review its own make-up, the composition of the executive management team, and the company's compensation policies.

The strategic review has resulted in the sale of the following assets:

  1. Northern Oklahoma
  2. Halkirk, Alliance, Wainwright, Clair and major abandonment liabilities
  3. Lochend Cardium
  4. Canadian royalties and fee title lands

The strategic review and subsequent actions have brought substantial benefits to Equal. Among them:

  • Proceeds from the asset sales total $129.5 million, averaging over $48,000 per boe/d of production and $19.00 per boe of proven plus probable reserves.
  • A major reduction in corporate net debt from $149 million at the onset of the review to an estimated $23 million at the end of 2012 including a cash balance of $22 million. Equal's debt-to-cash flow ratio is in the top 10% of our current competitor peer group.
  • The Central Oklahoma asset base has growth potential from drilling in addition to significant upside associated with a recovery in natural gas and natural gas liquids pricing. Equal has retained approximately 75% of the production and 80% of its reserves that existed at the onset of the strategic review.
  • The cash reserves combined with an undrawn bank credit facility of $125 million allow the company to consider additional strategic growth strategies including acquisitions.
  • A single asset base that creates focus and clarity for management and shareholders. Equal is now an exploration and production company operating solely in Central Oklahoma, which will allow management to focus on growth and cost efficiency. General and administrative costs will be reduced significantly.
  • A reduction in asset retirement obligation from $31 million to $10 million.

The graph below (see link near the end of this release) compares the shareholder return on a $100 investment in Equal common shares to the return in the S&P/TSX and the S&P/TSX Energy Index from the start of the strategic review process on May 3, 2012 to November 20, 2012.

"Investors have clearly recognized that the strategic review would yield tangible and positive results", Mr. Botterill said. "The measures that we are announcing today fully justify that confidence."

Scotiabank and Desjardins Capital Markets acted as advisors on the strategic review process.

2013 Budget:

The board has approved the company's 2013 operating and capital budget, as follows:

  • Average production of approximately 7,900 boe/d (6,400 boe/d net of royalties).  Production is comprised of 52% natural gas; 46% NGL; 2% oil.
  • Cash flow estimated at $33 million based on the following assumptions:
    • Nymex Natural Gas: USD$3.90/mmbtu (Equal realization 87% of Nymex)
    • Propane at Conway Kansas: USD$0.90/gallon (Equal NGL realization 89% of Conway Propane)
    • WTI Oil: USD$90.00/bbl (Equal realization 96% of WTI)
  • Debt/Cash Flow: 0.7x
  • Capital spending of $36 million ($30 million for drilling and related infrastructure; $6 million for land and maintenance capital)
    • Drilling is expected to start in early 2013 with a rig running continuously through 2013 for a total of 10 Twin Cities Central Dolomite horizontal liquids rich natural gas wells drilled by the end of 2013.

  • Royalties and production taxes: 23%; Operating costs: $5.85/boe ($7.25/boe net of royalties); G&A: $2.65/boe ($3.25/boe net of royalties)
  • The sensitivities on 2013 cash flow for variation in commodity prices are as follows:
    • USD$0.50/mmbtu Nymex = $0.8 million change in cash flow (57% of projected natural gas production is hedged at an average of USD$3.71/mmbtu)
    • USD$0.10/gallon NGL prices = $3.7 million change in cash flow
    • USD$5.00/bbl WTI = $0.2 million change in cash flow


Future Plans:

As recommended by Equal's strategic advisors and management, and approved by the board of directors, Equal will move forward as an exploration and production company. Equal will also implement a USD$0.20 per share annual dividend, beginning on January 1, 2013 and payable at the end of each calendar quarter. Although the board of directors gave serious considerations to other corporate structures, such as a U.S. MLP and a Canadian trust, expert advice on current market and commodity price conditions deemed them not to be prudent steps for Equal at this time.

Equal's remaining asset is its Central Oklahoma Hunton play with current production of approximately 7,800 boe/d of liquids-rich natural gas in an area with a strong history of drilling success. Equal has  an established inventory of future drilling locations and a staff of experienced people managing these assets.

About Equal Energy:

Equal Energy is an oil and gas exploration and production company based in Calgary, Alberta, with its United States operations office located in Oklahoma City, Oklahoma. Equal's shares and convertible debentures are listed on the Toronto Stock Exchange under the symbols (EQU, EQU.DB.B), and shares are listed on the New York Stock Exchange under the symbol (EQU). Equal's oil and gas assets are centered on the Hunton liquids-rich natural gas property in Central Oklahoma.

Forward-Looking Statements

Certain information in this press release constitutes forward-looking statements under applicable securities law including the timing or uncertainty of the sale of Equal's royalties and fee title lands, assignment of tax pools, the repayment of the bank facility, the 2013 budget projections, the timing of the commencement of drilling and the payment of future dividends. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may," "should," "anticipate," "expects," "seeks" and similar expressions.

Forward-looking statements necessarily involve known and unknown risks, such as risks associated with closing the sale of the royalties and fee title lands, assignment of tax pools and subsequent payment, oil and gas production; marketing and transportation; loss of markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve and future production estimates; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of dispositions; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters. Readers are cautioned that the foregoing list of factors is not exhaustive.

Readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Additional information on these and other factors that could affect Equal's operations or financial results are included in Equal's reports on file with Canadian and U.S. securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), the SEC's website (www.sec.gov), Equal's website (www.equalenergy.ca) or by contacting Equal. Furthermore, the forward looking statements contained in this news release are made as of the date of this news release, and Equal does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

Conversion: Natural gas volumes recorded in thousand cubic feet ("mcf") are converted to barrels of oil equivalent ("boe") using the ratio of six (6) mcf to one (1) barrel of oil ("bbl"). Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead. All dollar values are in Canadian dollars unless otherwise stated.

SOURCE Equal Energy Ltd.

PDF available at: http://stream1.newswire.ca/media/2012/11/27/20121127_C4142_DOC_EN_21306.pdf

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Grow your business with enterprise wearable apps using SAP Platforms and Google Glass. SAP and Google just launched the SAP and Google Glass Challenge, an opportunity for you to innovate and develop the best Enterprise Wearable App using SAP Platforms and Google Glass and gain valuable market exposure. In his session at @ThingsExpo, Brian McPhail, Senior Director of Business Development, ISVs & Digital Commerce at SAP, outlined the timeline of the SAP Google Glass Challenge and the opportunity for developers, start-ups, and companies of all sizes to engage with SAP today.
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo – to be held June 9-11, 2015, at the Javits Center in New York City, NY – is now accepting Hackathon proposals. Hackathon sponsorship benefits include general brand exposure and increasing engagement with the developer ecosystem. At Cloud Expo 2014 Silicon Valley, IBM held the Bluemix Developer Playground on November 5 and ElasticBox held the DevOps Hackathon on November 6. Both events took place on the expo floor. The Bluemix Developer Playground, for developers of all levels, highlighted the ease of use of...
Enthusiasm for the Internet of Things has reached an all-time high. In 2013 alone, venture capitalists spent more than $1 billion dollars investing in the IoT space. With "smart" appliances and devices, IoT covers wearable smart devices, cloud services to hardware companies. Nest, a Google company, detects temperatures inside homes and automatically adjusts it by tracking its user's habit. These technologies are quickly developing and with it come challenges such as bridging infrastructure gaps, abiding by privacy concerns and making the concept a reality. These challenges can't be addressed w...
The industrial software market has treated data with the mentality of “collect everything now, worry about how to use it later.” We now find ourselves buried in data, with the pervasive connectivity of the (Industrial) Internet of Things only piling on more numbers. There’s too much data and not enough information. In his session at @ThingsExpo, Bob Gates, Global Marketing Director, GE’s Intelligent Platforms business, to discuss how realizing the power of IoT, software developers are now focused on understanding how industrial data can create intelligence for industrial operations. Imagine ...
SYS-CON Events announced today that Liaison Technologies, a leading provider of data management and integration cloud services and solutions, has been named "Silver Sponsor" of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York, NY. Liaison Technologies is a recognized market leader in providing cloud-enabled data integration and data management solutions to break down complex information barriers, enabling enterprises to make smarter decisions, faster.
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal today!
Hadoop as a Service (as offered by handful of niche vendors now) is a cloud computing solution that makes medium and large-scale data processing accessible, easy, fast and inexpensive. In his session at Big Data Expo, Kumar Ramamurthy, Vice President and Chief Technologist, EIM & Big Data, at Virtusa, will discuss how this is achieved by eliminating the operational challenges of running Hadoop, so one can focus on business growth. The fragmented Hadoop distribution world and various PaaS solutions that provide a Hadoop flavor either make choices for customers very flexible in the name of opti...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water, are pursuing SmartGrid initiatives that represent one of the more mature examples of SAE. We have s...
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrategies, will examine why IT must finally fulfill its role in support of its SBUs or face a new round of...
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device experiences grounded in people's real needs and desires.
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Wearable devices have come of age. The primary applications of wearables so far have been "the Quantified Self" or the tracking of one's fitness and health status. We propose the evolution of wearables into social and emotional communication devices. Our BE(tm) sensor uses light to visualize the skin conductance response. Our sensors are very inexpensive and can be massively distributed to audiences or groups of any size, in order to gauge reactions to performances, video, or any kind of presentation. In her session at @ThingsExpo, Jocelyn Scheirer, CEO & Founder of Bionolux, will discuss ho...
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impact.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. It also ensured scalability and better service for customers, including MUY! Companies, one of the country's largest franchise restaurant companies with 232 Pizza Hut locations. This is one example of WebRTC adoption today, but the potential is limitless when powered by IoT.
Every day we read jaw-dropping stats on the explosion of data. We allocate significant resources to harness and better understand it. We build businesses around it. But we’ve only just begun. For big payoffs in Big Data, CIOs are turning to cognitive computing. Cognitive computing’s ability to securely extract insights, understand natural language, and get smarter each time it’s used is the next, logical step for Big Data.
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...