Alberta Clipper Energy Inc.

Alberta Clipper Energy Inc.

March 29, 2007 08:13 ET

Alberta Clipper Energy Inc. (ACN-TSX) Announces Acquisition in its Sylvan Lake Core Area; Bought Deal Financing; and Upward Revision to 2007 Guidance


CALGARY, ALBERTA--(CCNMatthews - March 29, 2007) -


Alberta Clipper Energy Inc. ("Alberta Clipper" or the "Company")(TSX:ACN) advises that it has entered into an agreement to acquire certain assets (the "Assets") in its core area of Sylvan Lake for total cash consideration of approximately $65.0 million after certain closing adjustments (the "Acquisition").

The Assets are located in Alberta Clipper's Sylvan Lake core area and are immediately adjacent to, and in some cases overlie Alberta Clipper's existing Leduc production. The acquisition consists of high-quality, high-netback light oil and natural gas. The Assets are comprised of 2.932 Mmboe of proven-plus-probable reserves, as estimated by the vendor's third-party engineering firm, and approximately 1,000 boe/d of production (55% natural gas).

The asset acquisition is expected to close on May 10, 2007.

The highlights associated with the Acquisition are set forth below:

1. Purchase Price: C$65.0 million (net of certain closing adjustments)

2. Low Decline Reserves:

- 2.932 Mmboe proven-plus-probable reserves as estimated by the vendor's third party engineering firm. Alberta Clipper engineering estimates for the base production are 26% higher based upon internal assessments.

- Acquisition cost of $22.17 per boe proven-plus-probable based on estimates by the vendor's third-party engineering firm.

- Long Reserve Life Index of approximately 8 years proven-plus-probable based on estimates by the vendor's third-party engineering firm.

3. High Netback Production:

- Approximately 1,000 boe/d (55% gas, 45% oil)

- $38 netback (at US$62/bbl WTI and C$7.20/GJ AECO, less royalties and operating costs)

- $5.07/boe operating cost

- Acquisition cost of $65,000 per producing boe

4. Strong Recycle Ratio:

- 1.7 times recycle ratio based on acquisition cost and vendor's third-party engineering firm estimates of proven-plus-probable reserves.

5. Net Operating Income Multiple:

- 4.8 times (at US$62/bbl WTI and C$7.20/GJ AECO pricing)

6. Significant Drilling Upside:

- Significant horizontal drilling development project

- 5 near-term drilling locations (2.9 net) representing greater than 300 boe/d of risked production additions and 10 future drilling and re-completion opportunities

7. Other Key Attributes

- Overlying existing Alberta Clipper Leduc producing assets and prospects

- More than 13,000 net acres of land with multi-zone potential

- Approximately 65% operated production including identified upside opportunities

- Large remaining oil and gas in place (greater than 100 million barrels and 100 bcf gross) in the 4 largest pools being acquired

- An incremental 2% improvement in recovery factors in these large pools represents approximately 1 mmboe (net)

- Future unrecognized enhanced recovery potential

- Future facilities consolidation potential


In conjunction with the Acquisition, Alberta Clipper has entered into a bought deal equity financing agreement with a syndicate of underwriters led by GMP Securities Ltd. and including BMO Nesbitt Burns Inc., First Energy Capital Corp., and Canaccord Capital Corporation. The syndicate will issue 13,100,000 subscription receipts for common shares of Alberta Clipper (the "Subscription Receipts") at a price of $4.20 per Subscription Receipt for aggregate gross proceeds of $55.0 million.

Each Subscription Receipt will represent the right to receive one common share of Alberta Clipper, without the payment of any additional consideration, on the closing of the Acquisition. The proceeds from the offering of the Subscription Receipts will be deposited in escrow pending the closing of the Acquisition and Alberta Clipper's receipt of all necessary approvals. If the Acquisition closes on or before May 31, 2007, the net proceeds from the offering of the Subscription Receipts will be released to Alberta Clipper and used by Alberta Clipper to pay a portion of the Acquisition price.

The Subscription Receipt offering is subject to certain conditions including normal regulatory approvals. The Subscription Receipts will be offered in certain provinces of Canada by way of a short form prospectus. The closing of the Subscription Receipt offering is expected to occur on or about April 24, 2007.

The Acquisition is highly accretive to Alberta Clipper on a reserves, production and cash flow per share basis.

Upon completion of the transaction, Alberta Clipper anticipates raising its 2007 exit rate target to between 4,000 and 4,500 boe/d.

Alberta Clipper Energy Inc. is a publicly traded Canadian energy company involved in the exploration, development, and production of natural gas and crude oil in western Canada.

This press release contains forward-looking statements. More particularly, this press release contains statements concerning Alberta Clipper's projected annual average and exit rate of production of oil and natural gas for 2007 and expected debt and cash flow. The forward-looking statements are based on certain key expectations and assumptions made by Alberta Clipper, including expectations and assumptions concerning prevailing commodity prices and exchange rates, availability and cost of labor and services, the timing of receipt of regulatory approvals, the performance of existing wells, the success obtained in drilling new wells, the performance of new wells and the sufficiency of budgeted capital expenditures in carrying out Alberta Clipper's planned activities.

Although Alberta Clipper 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 Alberta Clipper 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, the risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These risks are set out in more detail in Alberta Clipper's annual information form for the year ended December 31, 2006, which can be accessed at

The forward-looking statements contained in this press release are made as of the date hereof and Alberta Clipper 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.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable states securities laws.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information