Canadian Superior Energy Inc.

Canadian Superior Energy Inc.

January 16, 2008 08:38 ET

Canadian Superior Energy Inc. Grows Western Canada Production Through $51.8 Million Acquisition of Seeker Petroleum Ltd.

CALGARY, ALBERTA--(Marketwire - Jan. 16, 2008) - Canadian Superior Energy Inc. ("Canadian Superior" or the "Company") (TSX:SNG) (AMEX:SNG) and Seeker Petroleum Ltd. ("Seeker") are pleased to announce that they have entered into an acquisition agreement whereby Canadian Superior will acquire by plan of arrangement, subject to certain conditions, all of the issued and outstanding shares of Seeker, for total consideration of approximately $51.8 million (the "Transaction"), including the assumption of approximately $8.5 million of net debt.

Under the terms of the Transaction, Canadian Superior will offer $0.85 cash for each Seeker common share or 0.2285 Canadian Superior common shares (priced at $3.72/share) for each Seeker common share, subject to a maximum cash component of $14,210,797 and maximum share component of 7,651,866 Canadian Superior shares. The maximum cash and shares offered are subject to possible adjustment due to exercise of options.

Mr. Craig McKenzie, Canadian Superior's CEO, said in Calgary today "Canadian Superior's strategy is to grow our international business, as evidenced by our natural gas discovery offshore Trinidad earlier this week, and to grow our Western Canadian production base internally through the 'drill bit' and by acquisitions. This transaction is consistent with our strategy and is also accretive to our bottom line". In addition, McKenzie said, "Seeker is a very good geographical fit with our current production and offers excellent additional drilling potential for both oil and gas."

Mr. Leif Snethun, Seeker's President and CEO, added "Canadian Superior offers our shareholders the opportunity to merge into a well capitalized, public company with listings on both the TSX and AMEX. In addition, our shareholders will continue to have exposure to the Seeker assets while being able to participate in a larger production base and Canadian Superior's high impact international projects."

Transaction Overview:

Canadian Superior will acquire approximately 1,035 BOE/d (72.5% natural gas, 27.5% oil & liquids), approximately 2,073 MMBOE of proven plus probable reserves with approximately 1,297 MMBOE of additional possible reserves, 57,060 net acres (101,255 gross acres) of undeveloped land and 102 sq. km of proprietary 3D seismic. In addition to the 1,035 BOE/d current production, Seeker has approximately an additional 240 BOE/d (67% light oil) that is anticipated to be on-stream early February 2008.

Based on the purchase price of $51.8 million and after excluding the
undeveloped land and seismic valued at approximately $10.4 million, the
Transaction metrics are:

Production $39,972 per BOE/d based on estimated current production
($32,448 per BOE/d including 240 BOE/d behind pipe);

Reserves $19.96 per proven plus probable BOE ($12.28 per proven plus
probable plus possible BOE including 1,297 MMBOE of possible

Cash Flow 3.6 times estimated 2008 cash flow using Enterprise Value
($7.00/mcf AECO, $US85 WTI and 1,250 BOE/d).

The Transaction will increase Canadian Superior's Western Canadian production base by 31% to over 4,350 BOE/d. The shareholders of both companies will also have the opportunity to participate in Canadian Superior's growing international business that includes its large exploration programme currently underway offshore Trinidad, operated by Canadian Superior with BG Group plc. as a major partner.

The boards of directors of both Canadian Superior and Seeker have unanimously approved the Transaction. The Seeker board of directors has concluded that the Transaction is in the best interests of its shareholders, and has resolved to recommend that Seeker shareholders vote their shares in favour of the Transaction. Additionally, all of the directors, senior officers and a major shareholder of Seeker, representing approximately 43% percent of the outstanding Seeker common shares, have agreed to enter into lock-up agreements to vote their shares in favour of the Transaction. The Transaction contains a mutual non-completion fee in the amount of $2 million which is payable by Seeker or Canadian Superior to the other, as the case may be, in certain circumstances if the Transaction is not completed. The Transaction requires the approval of Seeker shareholders along with customary regulatory, court and other approvals. An information circular outlining the Transaction will be mailed to Seeker shareholders in connection with the shareholder's meeting relating to such approvals. It is currently expected that a special meeting of Seeker shareholders to approve the Transaction will be held as soon as possible. The Seeker management information circular for the special meeting is expected to be mailed to Seeker shareholders by the middle of February 2008.

Upon closing of the Transaction, Canadian Superior will be producing over 4,350 BOE/d in Western Canada and will have over 160,000 acres of undeveloped land (68% average working interest) in Western Canada. Canadian Superior also has a very strategic land position offshore Trinidad and Tobago with 135,055 gross acres (74,534 acres net) of undeveloped offshore holdings and holds 1.23 million acres (100%) of exploration acreage offshore Nova Scotia, with Canadian Superior holding the largest offshore exploration acreage position in the basin.

Jennings Capital Inc. ("Jennings") is acting as sole financial advisor to Canadian Superior in respect of the Transaction. Jennings has advised the board of directors of Canadian Superior that they are of the opinion, as of the date hereof, that the Transaction is fair, from a financial point of view, to the shareholders of Canadian Superior.

Canadian Superior is a Calgary, Alberta, Canada based oil and gas exploration and production company with operations Offshore Trinidad and Tobago, Offshore Nova Scotia, Canada and in Western Canada. See Canadian Superior's website at to review Canadian Superior's operations in Western Canada, Offshore Trinidad and Tobago and Offshore Nova Scotia interests. Canadian Superior has approximately 20,000 shareholders worldwide, including some of the top institutional shareholders in North America.

Seeker Petroleum Ltd. is a Calgary, Alberta, Canada based private oil and gas exploration and production company. Major operating areas in Alberta include Puskwaskau, Kaybob/Windfall, Mulligan, and Red Earth, and in British Columbia, Cabin/Petitot and Parkland.

This news release contains forward-looking information, including estimates, projections, interpretations, prognoses and other information that may or relates to future production, project start-ups and future capital spending. Actual results, estimates, projections, interpretations, prognoses and/or estimated results could differ materially due to changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors or revisions. This news release may contain the reference to the term "undiscovered natural gas resources", which are those quantities of natural gas estimated to be contained in accumulations yet to be discovered. There is no certainty that any portion of undiscovered resources will be discovered and that, if discovered, in any discovery, the discovered resource may not be economically viable or technically feasible to produce. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio 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.

Statements herein that are not historical facts, such as the anticipated benefits of the acquisition discussed herein, estimates of the volume of reserves, future production levels, exploration results and plans, costs and prices, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These forward-looking statements involve known and unknown risks, uncertainties, scheduling, re-scheduling and other factors which may cause the actual results, performance, estimates, projections, interpretations, prognoses, schedules or achievements of the Corporation, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties include, but are not limited to, ability to integrate the acquired assets into the Company's operations without undue costs or unanticipated liabilities, oil and gas price and production volatility, exploration risks and results, political risks, project development risks, and the ability to raise financing. For a more detailed discussion of risks and other factors that may impact these forward looking statements please refer to the Risk Factors and other discussion contained in the Company's annual reports on Form 40-F, as the same are amended from time to time, on file with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements.

Contact Information

  • Canadian Superior Energy Inc.
    Investor Relations
    (403) 294-1411
    (403) 216-2374 (FAX)
    Canadian Superior Energy Inc.
    Suite 2700, 605 - 5th Avenue S.W.
    Calgary, Alberta
    Canada T2P 3H5
    Seeker Petroleum Ltd.
    Leif Snethun
    President and CEO
    (403) 770-1375
    (403) 770-1374 (FAX)
    Seeker Petroleum Ltd.
    Suite 1200, 300 - 5th Avenue S.W.
    Calgary, Alberta
    Canada T2P 3C4