Anderson Energy Ltd.

Anderson Energy Ltd.

June 28, 2005 08:55 ET

Anderson Energy Ltd. and Aquest Energy Ltd. Announce the Acquisition of Aquest Energy Ltd. by Anderson Energy Ltd.

CALGARY, ALBERTA--(CCNMatthews - June 28, 2005) -

NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Anderson Energy Ltd. ("Anderson"), a private oil and gas company, and Aquest Energy Ltd. ("Aquest"), a publicly traded oil and gas company listed on the Toronto Stock Exchange (TSX: AEX), jointly announce today that their respective Boards of Directors have unanimously approved a proposal for Anderson to acquire Aquest pursuant to a Plan of Arrangement (the "Arrangement") and determined that the Arrangement is in the best interest of their security holders. Upon completion of the Arrangement, shareholders of Aquest will receive 0.31 shares of Anderson for each Aquest share held. The Anderson executive team includes Brian Dau, President and CEO, and J.C. Anderson, Chairman. Anderson is pleased to announce that Glenn Hockley, the current Chairman of Aquest, will join the Anderson Board of Directors on completion of the transaction. All officers and directors of both Anderson and Aquest have agreed to vote in favor of the Arrangement.

The acquisition is subject to approval by the security holders of both Anderson and Aquest and is also subject to regulatory approval. It is a condition of closing that the Anderson common shares be listed on the Toronto Stock Exchange. This transaction marks the return of members of the Anderson team to the public markets. Previously, the Anderson team built Anderson Exploration Ltd. into a senior Canadian exploration and production company with over 200,000 BOE/d of production before it was sold to Devon Energy Corporation for approximately U.S. $4.6 billion (enterprise value) in 2001.

Since its inception in 2002, Anderson has grown production to 1,800 BOE/d and has assembled a high-quality, low-risk development portfolio of opportunities in the Sylvan Lake, Greencourt and Peace River Arch areas of Alberta and in northeast B.C. Anderson completed a $24 million private placement financing in December of 2004 to a broad group of institutional and private investors as well as to Anderson management, directors and employees at a price of $5.50 per common share (and $6.90 per flow through share).

Brian Dau commented, "The acquisition of Aquest represents an exceptional opportunity for Anderson to expand its position in the Sylvan Lake area and use Anderson's expertise to develop Aquest's assets. I am confident in Anderson's substantial multi-year drilling inventory and the combination with Aquest further enhances this portfolio." J.C. Anderson added, "I am very excited that Anderson is returning to the public equity markets and I am confident that our team can continue our track record of success in generating attractive, positive returns to our shareholders."

Glenn Hockley commented, "I am very pleased to see the Aquest assets with a team that has the experience and market franchise that Anderson has. I believe we have given our shareholders a unique opportunity to participate in the growth and return of Anderson as a public company."

The Anderson management team also includes Darlene Wong as VP Finance and CFO, Phil Harvey as VP Exploitation, Dave Spyker as VP Business Development, Dan Kell as VP Land, Mike Marshall as VP Exploration and Blaine Chicoine as VP Operations. Five of the seven members of the management team were senior contributors to the previous success at Anderson Exploration Ltd. Upon completion of the proposed transaction, the Board of Directors will include J.C. Anderson, Brian Dau, David Scobie, R.T. (Tim) Swinton, John Hokanson and Glenn Hockley.

Operating Highlights:

Anderson is currently a natural gas levered (95%+) exploration company with assets focused in the Sylvan Lake, Greencourt and Peace River Arch areas of Alberta and in northeast B.C. Anderson has built its asset base organically with the drill bit and through a strategic farm-in and joint venture agreement with a major royalty trust. Anderson is currently conducting a 42 well drilling program at Sylvan Lake and a 3 well program in the Peace River Arch. As at March 31, 2005, Anderson had 33.6 million shares outstanding (37 million on a fully diluted basis), net debt of $0.4 million and tax pools of approximately $95 million. Proven plus probable reserves, based on a March 31, 2005 engineering report by AJM Petroleum Consultants, are 8,300 MBOE and net undeveloped land is 200,000 acres. Anderson's net asset value is $4.09 per share (pre-tax 10% NPV based on the March 31 engineering report).

Aquest is currently producing 1,800 BOE/d (64% natural gas) and has a broad portfolio of opportunities, specifically complementing Anderson's Sylvan Lake core area. As at March 31, 2005, Aquest had 30.9 million shares outstanding (32 million on a fully diluted basis), net debt of approximately $20.4 million and tax pools of approximately $43 million. Proven plus probable reserves at March 31, 2005, based on a December 31, 2004 engineering report by McDaniels & Associates Consultants Ltd. and Anderson's internal estimates for first quarter 2005 drilling activity, are 3,970 MBOE. Aquest has 58,000 net acres of undeveloped land.

The combined company will have current production in excess of 3,600 BOE/d. Anderson believes the Company will be able to organically grow production to an average of 6,000 - 6,400 BOE/d for 2006 based on the current inventory of exploration prospects and development drilling opportunities. For the balance of 2005, 80% of the drilling program will be focused on lower risk shallow gas opportunities in the Sylvan Lake area. For 2006, current drilling plans are focused primarily in Sylvan Lake and northeast B.C. with 67% of the wells being lower risk development locations.

The combined company will have approximately 44 million basic shares outstanding (48 million on a fully diluted basis).

Arrangement:

An information circular detailing the Arrangement is anticipated to be mailed to security holders of Aquest and Anderson in late July with security holder meetings to approve the transaction to be held in late August. The Arrangement will require approval by at least 66 2/3% of the votes cast by the Aquest and Anderson security holders voting at each meeting, as well as Court and other regulatory approvals. Subject to certain exceptions, the Board of Directors of each of Aquest and Anderson have agreed that they will not solicit or initiate discussions or negotiations with any third party for any business combination involving Aquest or Anderson, and under defined circumstances Aquest and Anderson have each agreed to a reciprocal noncompletion fee of $1.6 million.

Subject to the satisfaction of customary closing conditions and the receipt of applicable regulatory and other approvals, it is anticipated that the closing of the transaction will occur shortly after the meetings of security holders.

Fairness Opinions:

Tristone Capital Inc. is acting as financial advisor to Anderson with respect to the transaction and has advised the Anderson Board of Directors that, subject to review of the final forms and documents effecting the transaction, the consideration to be received by Anderson shareholders as a result of the completion of the Arrangement is fair from a financial point of view.

FirstEnergy Capital Corp. is acting as financial advisor to Aquest with respect to the transaction and has advised the Aquest Board of Directors that, subject to review of the final forms and documents effecting the transaction, the consideration to be received by Aquest shareholders as a result of the completion of the Arrangement is fair from a financial point of view.

Conclusion:

Brian Dau added, "This transaction represents a unique opportunity for Anderson to expand its land base in a strategic core area and we are very excited to bring the Anderson name back into the public markets. With a strong balance sheet, the combined company is well positioned to capitalize on its extensive development opportunities".

Cautionary Statements:

Disclosure provided herein in respect of BOE units may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf to 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.

Certain information set forth in this document, including management's assessment of Anderson's and Aquest's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond these parties' control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Anderson's and Aquest's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Anderson and Aquest will derive therefrom. Anderson and Aquest each disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1993 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act.

Contact Information

  • Anderson Energy Ltd.
    Brian Dau
    President & CEO
    (403) 206-6000
    or
    Anderson Energy Ltd.
    J.C. Anderson
    Chairman
    (403) 256-7550
    or
    Aquest Energy Ltd.
    Daryl Connolly
    President & CEO
    (403) 444-0251