|By PR Newswire||
|November 27, 2012 11:50 PM EST||
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.
- 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:
- Northern Oklahoma
- Halkirk, Alliance, Wainwright, Clair and major abandonment liabilities
- Lochend Cardium
- 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.
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
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.
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.
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his Day 2 Keynote at @ThingsExpo, Henrik Kenani Dahlgren, Portfolio Marketing Manager at Ericsson, discussed how to plan to cooperate, partner, and form lasting all-star teams to change t...
Jun. 25, 2016 07:45 AM EDT Reads: 970
Connected devices and the industrial internet are growing exponentially every year with Cisco expecting 50 billion devices to be in operation by 2020. In this period of growth, location-based insights are becoming invaluable to many businesses as they adopt new connected technologies. Knowing when and where these devices connect from is critical for a number of scenarios in supply chain management, disaster management, emergency response, M2M, location marketing and more. In his session at @Th...
Jun. 25, 2016 07:30 AM EDT Reads: 728
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Jun. 24, 2016 04:15 PM EDT Reads: 1,057
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
Jun. 24, 2016 02:15 PM EDT Reads: 365
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Jun. 24, 2016 01:00 PM EDT Reads: 1,305
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Jun. 24, 2016 12:00 PM EDT Reads: 1,542
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
Jun. 24, 2016 11:15 AM EDT Reads: 587
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
Jun. 24, 2016 10:30 AM EDT Reads: 900
19th Cloud Expo, taking place November 1-3, 2016, 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 enterpri...
Jun. 24, 2016 09:45 AM EDT Reads: 1,158
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
Jun. 24, 2016 09:30 AM EDT Reads: 1,110
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Bradley Holt, Developer Advocate a...
Jun. 24, 2016 09:30 AM EDT Reads: 583
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
Jun. 24, 2016 08:45 AM EDT Reads: 1,218
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th 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 and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Jun. 24, 2016 08:45 AM EDT Reads: 1,099
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Jun. 24, 2016 08:30 AM EDT Reads: 784
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Jun. 24, 2016 08:15 AM EDT Reads: 1,179
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Jun. 24, 2016 08:15 AM EDT Reads: 1,413
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
Jun. 24, 2016 07:30 AM EDT Reads: 963
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices 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 opportuni...
Jun. 24, 2016 07:15 AM EDT Reads: 1,153
industrial company for a multi-year contract initially valued at over $4.0 million. In addition to DataV software, Bsquare will also provide comprehensive systems integration, support and maintenance services. DataV leverages advanced data analytics, predictive reasoning, data-driven diagnostics, and automated orchestration of remediation actions in order to improve asset uptime while reducing service and warranty costs.
Jun. 22, 2016 11:00 AM EDT Reads: 1,333
Vidyo, Inc., has joined the Alliance for Open Media. The Alliance for Open Media is a non-profit organization working to define and develop media technologies that address the need for an open standard for video compression and delivery over the web. As a member of the Alliance, Vidyo will collaborate with industry leaders in pursuit of an open and royalty-free AOMedia Video codec, AV1. Vidyo’s contributions to the organization will bring to bear its long history of expertise in codec technolo...
Jun. 19, 2016 12:45 PM EDT Reads: 1,228