Tango Announces Business Combination Transaction with Oil-Focused Private Company and Change in Management Team and Board of Dir
April 16 2010 - 9:01AM
Marketwired Canada
NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED
STATES.
Tango Energy Inc. ("Tango" or the "Company") (TSX VENTURE:TEI) announces that it
has entered into an amalgamation agreement (the "Agreement") with privately-held
Tamarack Valley Energy Ltd. ("Tamarack") and a wholly owned subsidiary of Tango,
pursuant to which Tango will acquire all of the issued and outstanding shares of
Tamarack on the basis of 11.538462 common shares of Tango in exchange for each
common share of Tamarack (the "Exchange Ratio"), resulting in the issuance of
approximately 55.1 million common shares of Tango. The Agreement also provides
for the appointment of a new management team (the "New Management Team"), a
reconstitution of the board of directors (the "New Board"), a name change, and
the issue of incentive securities (collectively, the "Transaction").
Mr. John Gunn, the Chief Executive Officer and a Director of Tango, stated
"Tango is very pleased to announce this transaction. Tango has achieved
considerable recent success, and we believe that Tamarack will bring an ongoing
focus on those things that we consider important: growing cash flow, improving
efficiencies, and broadening our asset base."
The New Management Team will be led by Mr. Brian Schmidt as President & Chief
Executive Officer and Director, and will include Mr. Lew Hayes as Vice President
Production & Operations, and Mr. Ron Hozjan as Vice President Finance & Chief
Financial Officer and Director.
Mr. Schmidt stated "We are excited about the opportunity to combine Tamarack and
Tango. Our objective is to build an oil and natural gas company of significant
size and critical mass, and to create value for the shareholders of Tango and
Tamarack by delivering such growth."
The New Board will be comprised of Mr. Anthony Lambert, Mr. David MacKenzie, Mr.
Floyd Price, Mr. Dean Setoguchi, and Mssrs. Schmidt and Hozjan. Mr. Gunn will
remain on the board of the Company.
Pro-Forma Highlights
Assuming the completion of the Transaction, the pro forma entity will have the
following attributes:
Current Production 720 BOE/d
Proved Reserves 1.3 MMBOE(1)
Proved plus Probable Reserves 2.4 MMBOE(1)
Undeveloped Land 44,600 net acres, including
5,600 net acres of lands
prospective for the Cardium
Positive Working Capital $4.0 million(2)
Undrawn Credit Facilities $5.0 million
Share Capital (Basic) 120.9 million common shares
Notes:
(1) As per the December 31, 2009 Paddock Lindstrom & Associates Ltd.
reserves report for Tango.
(2) As at March 31, 2010, net of expected transaction costs.
Rationale For The Transaction
The Transaction provides the Company with an experienced management team and a
fully funded program of drilling opportunities, which are expected to provide
additional growth to and diversification of the Company's current production and
reserves base. Pro forma the Transaction, the Company will have 5,600 net acres
of undeveloped land prospective for the Cardium primarily in the Lochend area,
14,975 net acres of undeveloped land prospective for the Montney and Doig in the
Wilder/Inga areas, and 24,025 net acres of additional undeveloped land. This
improved undeveloped land base, combined with a positive working capital
position and available credit facilities, is expected to provide a platform for
near-term growth through internally generated prospects focusing on the
exploitation of oil resource plays.
The New Management Team has a proven record of achieving significant production
and reserves growth, and extensive experience in applying new technology to high
oil and natural gas "in place" reservoirs. Following the completion of the
Transaction, the strategy of the Company will be to continue to assemble
substantial land positions in areas with large resource-in-place, to develop the
Cardium hydrocarbon potential on its undeveloped land, and to continue to
advance other opportunities, including strategic acquisitions and other
transactions. Future production growth is expected to be driven by oil-focused
drilling, including both light and heavy oil targets, in addition to continuing
to develop Tango's primary producing area at Quaich.
New Management Team
The New Management Team has a proven track record of capturing opportunities in
early stage, large scale resource plays.
Mr. Brian Schmidt Mr. Schmidt is a professional engineer with over
President & Chief 30 years of oil and gas experience. He was most
Executive Officer and recently a founder of Spearpoint Energy Corp.
Director ("Spearpoint"). While at Spearpoint, Mr. Schmidt
orchestrated a 1,000 section farm-in which
included access to Cardium prospective lands in
Garrington. Spearpoint was ultimately sold to NAL
Oil & Gas Trust. Prior to that he was the
President of Apache Canada where he assembled
large blocks of undeveloped land with material
drilling upside that contributed to significant
growth during his tenure. He began his career at
Shell Canada, spending 19 years there prior to
joining Apache Canada.
Mr. Lew Hayes Mr. Hayes is a professional engineer with over 25
Vice President Production years of oil and gas experience. Most recently Mr.
& Operations Hayes consulted with Spearpoint. Prior to that he
founded HYgait Resources Ltd. ("HYgait") where he
was the President and COO. HYgait was very
successful with early entry into the Bakken and
Lower Shaunavon plays in Saskatchewan prior to
merging with Wild River Resources Ltd. Mr. Hayes
also was the VP Operations at Petrovera Resources
Ltd. and the Drilling and Completions Manager at
CS Resources Limited. He has extensive experience
in horizontal drilling and completions as well as
operations.
Mr. Ron Hozjan, Vice Mr. Hozjan is a C.M.A. with over 22 years of oil
President Finance & Chief and gas experience, and over 14 years of
Financial Officer and experience as a senior financial officer. Most
Director recently he was the Chief Financial Officer at
Vaquero Resources Ltd. which was vended into RMP
Energy Ltd. Prior to that he was the Vice
President Finance and Chief Financial Officer at
Vaquero Energy Ltd. which grew successfully before
merging with Highpine Oil & Gas Limited.
The team is rounded out by Mr. Niels Gundesen as Chief Reservoir Engineer, Mr.
David Washenfelder as Senior Staff Geologist and Mr. Scott Reimond as Senior
Staff Geologist. This team has worked together for many years and has extensive
drilling experience in the Western Canadian Sedimentary Basin, including at
Apache Canada.
New Board
In addition to Mssrs. Schmidt and Hozjan, the New Board is expected to consist
of the following individuals:
Mr. Anthony Lambert Mr. Lambert is a professional engineer and is
currently the President, CEO and a Director of
Daylight Resources Trust. Previously, he was the
COO of Midnight Oil and Gas Ltd.
Mr. David MacKenzie Mr. MacKenzie is a professional engineer and an
independent businessman with over 35 years of oil
and gas experience. He is currently the Chairman
of Avant Garde Energy Corp., was the President of
Gascan Resources Ltd., and served as a director of
TUSK Energy Corporation.
Mr. Floyd Price Mr. Price is a geologist, and recently retired
from Apache Corporation as Executive VP
Exploration in 2009. He also served as Executive
VP Eurasia, Latin America and Australia after
serving as President of Apache Canada.
Mr. Dean Setoguchi Mr. Setoguchi is a chartered accountant and is
currently Vice President and Chief Financial
Officer of Keyera Facilities Income Fund. He has
extensive experience in junior oil and gas
companies as former CFO of Cordero Energy Inc. and
Resolute Energy Inc.
Mr. John Gunn Mr. Gunn is a professional engineer and is
currently Chief Executive Officer of Tango Energy
Inc. He has served in various executive and
directorship roles in public and private oil and
gas companies over the last 20 years.
Tamarack Warrants
Pursuant to the Agreement, all Tamarack performance warrants outstanding at the
time of closing of the Transaction will be replaced with Tango replacement
performance warrants (the "Warrants") based on the Exchange Ratio, resulting in
the issuance of approximately 23.4 million Warrants. Each Warrant will entitle
the holder to purchase one common share of Tango at a price of $0.26 per share
for a period of five years. The Warrants will vest and become exercisable as to
one-third upon the first, second, and third anniversaries of the closing of the
Transaction, and will contain the same material terms and conditions as the
Tamarack performance warrants.
Conditions and Approvals Related to the Transaction
Completion of the Transaction is subject to a number of conditions and approvals
including, but not limited to, the approval of the TSX Venture Exchange. The
Transaction also requires the approval of the shareholders of Tango and
Tamarack. The required approval of the shareholders of Tango (the "Tango
Shareholders") will be obtained at a special meeting of the Tango Shareholders
to be held on or about June 17, 2010 (the "Tango Meeting"). The required
approval of the shareholders of Tamarack (the "Tamarack Shareholders") may be
obtained by a written resolution executed by all of the shareholders of Tamarack
approving the Agreement and related matters (the "Written Resolution"), or if
the Written Resolution is not obtained, by ordinary resolution at a special
meeting of the Tamarack Shareholders to be held no later than May 31, 2010.
Tamarack has entered into an agreement to acquire a private oil and natural gas
company ("Privateco") immediately prior to the closing of the Transaction (the
"Privateco Acquisition"). Pursuant to the Privateco Acquisition, Tamarack will
acquire the Privateco's working capital and undeveloped land by acquiring all of
the issued and outstanding common shares of the Privateco in exchange for common
shares of Tamarack, which common shares are included in the number of common
shares of Tamarack that will be acquired by Tango. The completion of the
Privateco Acquisition, which is a condition to the closing of the Transaction is
subject to a number of conditions, including approval by the shareholders of
Privateco. The Board of Directors and officers of Privateco and certain other
shareholders, who, in aggregate, control over 70% of the shares of Privateco,
have entered into lock-up agreements pursuant to which they have agreed, among
other things, to approve the Privateco Acquisition.
Board of Directors' Recommendations and Lock-up Agreements
The Board of Directors of Tango has determined that the Transaction is in the
best interests of Tango and the Tango Shareholders, has unanimously approved the
Agreement, and recommends that the Tango Shareholders vote in favour of the
matters to be considered at the Tango Meeting, including the Transaction. In
coming to the foregoing determination, the Board of Tango also considered advice
provided by Peters & Co. Limited ("Peters & Co.") related to the Transaction.
The Board of Directors and officers of Tango and certain other shareholders,
who, in aggregate, own or control approximately 38% of the Tango Shares, have
entered into lock-up agreements pursuant to which they have agreed, among other
things, to vote in favour of the Transaction.
The Board of Directors of Tamarack has determined that the Transaction and
related matters are in the best interests of Tamarack and the Tamarack
Shareholders, has unanimously approved the Transaction, and recommends that the
Tamarack Shareholders vote in favour of the proposed amalgamation of Tango and
Tamarack.
The Board of Directors and officers of Tamarack and certain other shareholders,
who, in aggregate, own or control approximately 34% of the common shares of
Tamarack, have entered into lock-up agreements or agreed to enter into lock-up
agreements pursuant to which they have agreed, among other things, to vote in
favour of the proposed amalgamation of Tango and Tamarack.
The Agreement
The Agreement contains a number of customary representations, warranties and
conditions and provides for a reciprocal non-completion fee of $250,000 payable
in certain circumstances. The Agreement will be accessible on Tango's SEDAR
profile at www.sedar.com.
Financial Advisors
Peters & Co. is acting as exclusive financial advisor to Tango with respect to
the Transaction.
Paradigm Capital Inc. is acting as exclusive financial advisor to Tamarack with
respect to the Transaction.
About Tango
Tango Energy Inc. is a junior oil and gas exploration and development company
based in Calgary, Alberta, which is focused west of the fifth meridian in
Alberta.
Tango has 65.8 million common shares that trade on the TSX Venture Exchange
under the symbol TEI.
Forward Looking Statements
This document contains forward-looking statements. More particularly, this
document contains statements concerning the completion of the transactions
contemplated by the Agreement, including the private company acquisition, and
certain other matters related to the transactions.
The forward-looking statements are based on certain key expectations and
assumptions made by Tango, including expectations and assumptions concerning
completion of the Privateco Acquisition, the Transaction and related matters,
timing of receipt of required shareholder and regulatory approvals and third
party consents and the satisfaction of other conditions to the completion of the
transactions. Although Tango believes that the expectations and assumptions on
which the forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because Tango can give no
assurance that they will prove to be correct. Since forward-looking statements
address future events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. These include, but
are not limited to, risks that required shareholder, regulatory and third party
approvals and consents are not obtained on terms satisfactory to the parties
within the timelines provided for in the Agreement, the Privateco Acquisition
may not be completed, and risks that other conditions to the completion of the
transactions are not satisfied on the timelines set forth in the Agreement or at
all.
The forward-looking statements contained in this press release are made as of
the date hereof and Tango undertakes no obligation to update publicly or revise
any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.
The term "BOE" may be misleading, particularly if used in isolation. A boe
conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
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