Toscana Energy Announces Acquisition of Oil Assets
November 25 2015 - 8:21PM
Toscana Energy Income Corporation ("Toscana Energy" or the
"Corporation") (TSX:TEI) is pleased to announce that it
has entered into a Purchase and Sale Agreement to acquire assets
(the "Assets") that produce, on average, 300 barrels a day of long
life operated light oil production in southern Alberta, for
$15,000,000 in cash. This acquisition represents the fourth
purchase of large resource in place oil reserves this year adding
to Toscana Energy's portfolio of gross overriding royalty (GORR)
interests and liquid rich natural gas assets.
The following are highlights of the Assets that are being
acquired by Toscana Energy:
- Large oil in place with enhanced oil recovery (EOR)
underway
- A Reserve Life Index of approximately 12 years*
- Run rate cash flow of 4.3 times
- Flowing barrel metric of $50,000*
- Proved acquisition price of $15.67 per barrel*
- Proved plus Probable acquisition price of $11.29 per
barrel*
- A recycle ratio on a proved plus probable basis of 2.48 times
based on run rate cash flow
Closing of this transaction is subject to customary closing
conditions as well as an increase in Toscana Energy's credit
facilities which is currently underway and expected to occur prior
to closing. Closing of this transaction is anticipated by year end
and will have an effective date of October 1, 2015.
*Reserves values based on an independent engineering report
prepared by a qualified reserves evaluator dated effective December
31, 2014.
Forward-Looking Statements:
Certain information provided in this press release constitutes
forward-looking statements. Specifically, this press release
contains forward-looking statements regarding the Assets production
levels, projected capital expenditures, projected operating
expenses and general and administrative costs, and sufficiency of
resources to fund operations. This information also includes
information regarding the acquisition of the Assets, expectations
and assumptions concerning the increase in the Corporation's credit
facilities, completion of the acquisition and the benefits to be
acquired therefrom including drilling, exploration and production
potential, operating costs and other economics. For the purposes of
this press release, the Corporation has assumed that the
information received from the Assets seller and other sources
regarding production on the property is accurate, and that the
Corporation's estimates of prospective drilling locations,
synergistic savings and potential production results are
reasonable. Since forward-looking statements address future events
and conditions, by their very nature they involve inherent risks
and uncertainties, including failure to obtain additional credit,
unexpected declines in production, expenses or costs associated
with the acquisition beyond what is anticipated, unforeseen
geophysical or geological structures, failing to complete the
acquisition on terms that are acceptable to the Corporation or at
all. Forward-looking statements are necessarily based on a number
of assumptions and judgments, including but not limited to,
assumptions relating to the outlook for commodity and capital
markets, the success of future resource evaluation and development
activities, the performance of producing wells and reservoirs, well
development and operating performance, general economic conditions,
weather, and the regulatory and legal environment. The reader is
cautioned that assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be incorrect. Actual results achieved
during the forecast period will vary from the information provided
herein as a result of numerous known and unknown risks and
uncertainties and other factors. You can find a discussion of those
risks and uncertainties in the Corporation's Canadian securities
filings. Such factors include, but are not limited to: general
economic, market and business conditions; weather conditions and
access to properties; fluctuations in oil prices; the results of
exploration and development drilling, recompletions and related
activities; timing and rig availability; outcome of exploration
contract negotiations; fluctuation in foreign currency exchange
rates; the uncertainty of reserve estimates; changes in
environmental and other regulations; uncertainties associated with
the regulatory review and approval process in respect to projects;
risks associated with the application of early stage technologies;
risks associated with oil and gas operations and other factors,
many of which are beyond the control of Toscana Energy. There is no
representation by the Corporation that actual results achieved
during the forecast period will be the same in whole or in part as
those forecasted. Except as may be required by applicable
securities laws of the Toronto Stock Exchange, Toscana Energy
assumes no obligation to publicly update or revise any
forward-looking statements made herein or otherwise, whether as a
result of new information, future events or otherwise.
The reserves information that can be derived from the
information in this press release are estimates only. In general,
estimates of oil and natural gas reserves are based upon a number
of variable factors and assumptions, such as production rates,
ultimate reserves recovery, timing and amount of capital
expenditures, ability to transport production, marketability of oil
and natural gas, royalty rates, the assumed effects of regulation
by governmental agencies and future operating costs, all of which
may vary materially from actual results. For those reasons,
estimates of the oil and natural gas reserves attributable to any
particular group of properties, as well as the classification of
such reserves prepared by different engineers (or by the same
engineers at different times) may vary. The actual reserves of the
Corporation may be greater or less than those calculated. In
addition, the Corporation's actual production, revenues,
development and operating expenditures will vary from estimates
thereof and such variations could be material.
Oil and gas Metrics
This press release contains metrics commonly used in the oil and
natural gas industry, such as reserves life index, run rate cash
flow, flowing barrel metric, proved acquisition price, proved plus
probable acquisition price and recycle ratio. These terms do not
have a standardized meaning and may not be comparable to similar
measures presented by other companies, and therefore should not be
used to make such comparisons. Reserves life index is calculated by
dividing year-end estimates of proved plus probable reserves by
expected annual production and may be used to determine how long a
well or property will continue to produce. Run rate cash flow
reflects the previous 12 months average net operating income and
may be used as a measure of the value of the acquisition as against
cash flow models for the assets. The flowing barrel metric is
calculated by dividing the purchase price for the asset by the
year-end production and is used to determine the amount that has
been paid for each barrel of production. The proved acquisition
price is calculated by dividing the purchase price by the number of
estimated barrels of oil of proved reserves and indicates the price
paid for each estimated barrel of proved reserves. The proved plus
probable acquisition price is calculated by dividing the purchase
price by the number of estimated barrels of oil of proved plus
probable reserves and indicates the price paid for each estimated
barrel of proved and probable reserves. The recycle ratio is
calculated by dividing the average net operating income for the
previous 12 months by the number of estimate barrels of proved plus
probable reserves and may be used as a measure of profitability for
a producer. Management uses these oil and gas metrics for its own
performance measurement and to provide stakeholders with measures
to compare the Corporation's operations over time. Readers are
cautioned that the information provided by these metrics, or that
can be derived from the metrics presented in this press release,
should not be relied upon for investment or other purposes.
About Toscana Energy Income Corporation
Toscana Energy is a conventional oil and gas producer with the
mandate to acquire high quality, long life oil and gas assets
including royalties, non-operated working interests and unitized
production for yield and capital appreciation. Toscana Energy is
managed by Sprott Toscana through Toscana Energy Corporation.
Sprott Toscana is a member of the Sprott Group of Companies.
For further information, please visit our website at
www.sprott-toscana.com or contact:
Joseph S. Durante, Chief Executive Officer Tel: (403) 410-6793
Fax: (403) 444-0090
Source: Toscana Energy Income Corporation