Tango Energy Inc. (TSX VENTURE:TEI) which, pursuant to shareholder approval was
renamed Tamarack Valley Energy Ltd. (and for purposes of this press release will
be referred to as "Tamarack Valley" or the "Company") has successfully completed
the previously announced business combinations which provided for the direct and
indirect acquisitions of two private oil and gas companies, Tamarack Valley
Energy Ltd. ("Subco") and Avant Garde Energy Corp. ("Avant Garde"). At the
annual and special meeting of shareholders of the Company held on June 17, 2010,
the shareholders of the Company approved, among other things, the appointment of
a new board of directors and a name change to "Tamarack Valley Energy Ltd."
(collectively, with the acquisitions of Subco and Avant Garde, are the
"Transactions"). Tamarack Valley expects to trade on the TSX Venture Exchange
under the symbol "TVE" approximately two business days following submission of
acceptable final documentation to the TSX Venture Exchange.
Brian Schmidt, the Company's new President, Chief Executive Officer and Director
explained "...that with the successful completion of the Transactions, Tamarack
Valley has a clean balance sheet, cash on hand and two initial Cardium light oil
resource plays in the Lochend and Harmattan/Garrington areas from which we
intend to grow Tamarack Valley in the near term. Recent successes by other
operators in those areas have been achieved through horizontal drilling and
multi-stage fracturing completions methods, which we will also utilize. I am
looking forward to working with a well-rounded, experienced team of oil and gas
industry professionals, most of whom I've worked with in the past, with the goal
of building Tamarack Valley into a far larger company than it is at the moment."
Tamarack Valley's New Management Team and Strategic Direction
The majority of the new management team has worked together successfully
capturing opportunities in early stage, large scale resource plays. This team
applies a methodical, strategic modeling process to identify, evaluate and
operate in key plays in the western Canadian sedimentary basin. To date, the
team has secured Cardium light oil drilling opportunities in its first two new
focus areas in central Alberta, in the Lochend and Harmattan/Garrington areas.
The Company's assets provide a stable production base of approximately 735
BOE/d, primarily from the Quaich area of southern Alberta, and the Avant Garde
assets provide additional prospective opportunities in the Montney natural gas
play in northeast BC.
Mr. Brian Schmidt Mr. Schmidt is a professional engineer with over 30
President & Chief years of oil and gas experience. He was most recently a
Executive Officer founder of Spearpoint Energy Corp. ("Spearpoint").
and Director 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 30 years
Vice President of oil and gas experience. Most recently Mr. Hayes
Production & consulted with Spearpoint. Prior to that he founded
Operations HYgait Resources Ltd. ("HYgait") where he was the
President and COO. HYgait was an early entrant 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 Mr. Hozjan is a C.M.A. with over 23 years of oil and gas
Vice President experience, and over 14 years of experience as a senior
Finance & Chief financial officer. Most recently he was the Chief
Financial Officer Financial Officer at Vaquero Resources Ltd. which was
and Director acquired by 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.
New Board
In addition to Mr. Schmidt and Mr. Hozjan, the new board will 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 Energy
Ltd. 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. Prior to the completion of the
Transaction, he was the Chairman of Avant Garde, 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 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 CFO 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 prior to the
completion of the Transaction, was CEO of the Company.
He has served in various executive and directorship
roles in public and private oil and gas companies over
the last 20 years.
Operational Focus
Tamarack Valley's resource play screening criteria are used to identify and
evaluate resource plays which have repeatability, scope, large original gas or
oil in place per section which implies long-life reserves with multi-zone or
thick single zone potential. These resource play targets can involve
conventional or unconventional production methods. Tamarack Valley plans to
control substantial assets in at least four resource plays each of which is
expected to have a medium risk profile. It is anticipated that each play will
offer enough scope and potential to carry the other three plays, with respect to
achieving internal rate of return targets and drive material Company growth.
Tamarack Valley is initially focused on two Cardium light oil plays in Alberta,
which we believe are prospective using modern horizontal drilling methods and
multi-stage fracturing technologies. In the Lochend area, Tamarack Valley
controls 7.75 net sections (4,965 net acres) of land and has identified 25
potential Cardium locations on a four well per prospective section basis. At the
end of May 2010, Tamarack Valley also acquired various interests in 6.25 gross
sections (1.93 net sections, 1,235 net acres) in the Harmattan/Garrington area
also in central Alberta. Recent successes by other operators in this area have
also been driven by horizontal drilling and multi-stage fracturing completions
in both the Cardium and Viking zones.
Tamarack Valley, through the Tango assets, has natural gas production and
acreage (10,200 net acres) in the Quaich area in southern Alberta. Production
from this area is stable at approximately 567 boe/d. The Quaich 3-3-10-3 W5M
well continues to produce at approximately 3.0 million cubic feet per day
("mmcf/d") gross sales (1.8 mmcf/d net) and the 12-34-9-3 W5M well is producing
at approximately 2.7 mmcf/d gross sales (1.6 mmcf/d net). Both wells have been
producing at these rates since early February, 2010 with little or no declines.
Production from the 3-3 well is currently being restricted.
Tamarack Valley also acquired northeast BC acreage (13,300 net acres) in the
Montney natural gas resource play from Avant Garde. This area fulfills all of
Tamarack Valley's resource play criteria, but will offer greater upside
potential with higher natural gas prices.
Pro forma Highlights of Tamarack Valley
Current Production 735 BOE/d
Proved Reserves 1.3 MMBOE(1)
Proved plus 2.4 MMBOE(1)
Probable Reserves
Undeveloped Land 45,800 net acres, including 6,100 net acres of lands
prospective for the Cardium
Positive Working $3.6 million(2)
Capital
Undrawn Credit $5.0 million
Facilities
Share Capital 123.4 million common shares
(Basic)
Share Capital 146.8 million common shares
(Fully diluted)(3)
Notes:
(1) As per the December 31, 2009 Paddock Lindstrom & Associates Ltd.
reserves report for the Company.
(2) Estimated as at June 17, 2010, net of costs associated with the
Transactions.
(3) Assuming the 2,024,273 preferred shares of Amalco which were issued to
former holders of Subco's preferred shares under the Transaction are
exchanged into 23,356,997 common shares ("Common Shares") of Tamarack Valley
in accordance with the terms of the Exchange Agreement as described below.
Preferred Shares and Exchange Agreement
As previously announced In the Company's press release dated May 25, 2010, the
parties entered into an amended and restated amalgamation agreement (the
"Agreement") providing for, among other things, the issuance and exchange of the
previously issued preferred shares in the capital of Subco instead of
performance warrants.
Pursuant to the Agreement, Subco preferred shares were exchanged for preferred
shares ("Amalco Preferred Shares") of the resulting amalgamated entity
("Amalco") on a one-to-one basis. The Company also entered into a share exchange
and shareholders agreement (the "Exchange Agreement") dated May 20, 2010 with
among others, all of the holders of the Subco preferred shares which provides
for the exchange of each Amalco Preferred Share for 11.538462 Common Shares upon
payment of $0.26 per Tamarack Valley Common Share equivalent, subject to certain
conditions.
The preferred share exchange must occur within five years from the closing date
of the Amalgamation. Up to one-third of the Amalco Preferred Shares may be
exchanged for Common Shares on or after each of the first, second and third
anniversary dates from the closing date of the Amalgamation. If there is a
"change of control" (as defined in the Company's option plan), the exchange
right shall be fully exercisable.
In certain circumstances, Tamarack Valley shall have the option to purchase each
Amalco Preferred Share for either, a cash payment reflecting the "in-the-money"
amount or equivalent Tamarack Valley Common Share consideration upon either, the
occurrence of a "change of control" of Tamarack Valley, the holder ceasing to
act as a director, officer, employee or consultant of Tamarack Valley for any
reason or the Common Shares trading at a 300% premium to the exercise price of
$0.26 per Common Share equivalent over any 20 consecutive trading day period.
Amalco currently has 2,024,273 Amalco Preferred Shares outstanding which are
held by the new insider group of Tamarack Valley. A maximum of 23,356,997 Common
Shares may be issued upon exercise of the Amalco Preferred Shares.
A portion of the Subco preferred shares, being 1,099,584 Amalco Preferred Shares
(or 12,687,508 Common Shares issuable on the exchange of the Amalco Preferred
Shares under the Exchange Agreement) are considered to be issued in recognition
of the Subco common shares purchased prior to the Transaction by the new insider
group of Tamarack Valley. The remaining 924,689 Amalco Preferred Shares (or
10,669,489 Common Shares issuable under the Exchange Agreement on the exchange
of the Amalco Preferred Shares) are considered incentive based securities under
TSX Venture Exchange policies.
Therefore 924,689 Amalco Preferred Shares (or 10,669,489 Common Shares)
representing approximately 8.65% of the then issued and outstanding Common
Shares on a non-diluted basis will be treated as "security based compensation
arrangements" together with any Common Shares issuable under the Company's "10%
rolling" option plan (collectively, "Equity Compensation Shares"). The Equity
Compensation Shares will not exceed 20% of the then issued and outstanding
Common Shares and are within the thresholds imposed by the TSX Venture Exchange
pursuant to its policies.
As a result of the completion of the Transactions, the new insider group of
Tamarack Valley, beneficially owns, controls or directs, directly or indirectly,
an aggregate of 19,973,611 Common Shares (representing approximately 16.19% of
the then outstanding Common Shares on a non-diluted basis) and 1,320,106 Amalco
Preferred Shares (representing approximately 65.21% of the then outstanding
Amalco Preferred Shares).
Financial Advisors
Peters & Co. Limited acted as exclusive financial advisor to Tango Energy Inc.
with respect to the Transaction.
Paradigm Capital Inc. acted as exclusive financial advisor to Tamarack Valley
Energy Ltd. with respect to the Transaction.
Forward Looking Statements
This document contains forward-looking statements as defined by securities
legislation. More particularly, this document contains statements regarding the
planned growth of Tamarack Valley, expected plans, drilling inventory,
production, presence of oil pools or gas accumulations, economics and risks of
identified resource plays, amount of cashflow and working capital and reserve
estimates and such statements are made as of June 17, 2010.
These forward-looking statements are based on assumptions and analysis as by
Tamarack Valley in light of its experience, current conditions and expected
future development in the areas it is currently active and other factors it
believes are appropriate in the circumstances. By their nature, these
forward-looking statements are subject to numerous risks and uncertainties, some
of which are beyond the Company's control, including the impact of general
economic conditions, industry conditions, volatility of commodity prices,
unexpected operational events, environmental risks, competition from other
industry participants, stock market volatility and ability to access sufficient
capital from internal and external sources and access to continued land and
drilling opportunities. For production and reserves, the factors include
mechanical failures or inability to access production facilities; the
unanticipated encroachment of water or other fluids into the producing
formation; and, the inability to drill, complete and tie-in wells on schedule
due to a lack of oilfield services being available on a cost efficient basis,
poor weather, the inability to negotiate surface access or regulatory delays and
all other assumptions and risks identified with reserve estimates as outlined in
the reserve report referenced in the Information Circular mailed to shareholders
for approval of the Transactions and posted on SEDAR at www.sedar.com (the
"Circular").
Although the Company 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 the Company 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, performance or achievement could differ
materially from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, risks identified in the Circular.
Accordingly, no assurance can be given that any of the events expressed or
implied in the forward looking statements will transpire or occur, or if any of
them do, what benefits the Company will derive therefrom.
The forward-looking statements contained in this press release are made as of
the date hereof and the Company 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 forward looking statements are expressly qualified by these
cautionary statements.
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.
About Tamarack Valley Energy Ltd.
Tamarack Valley is an oil and gas company involved in the identification,
evaluation and operation of resource plays in the western Canadian sedimentary
basin. The Company uses a rigorous, proven modeling process to carefully manage
risk and identify growth opportunities and has assets in Lochend,
Harmattan/Garrington and Quaich in Alberta and Montney in northeast BC.
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