Anderson Energy Ltd.

Anderson Energy Ltd.

October 19, 2012 09:00 ET

Anderson Energy Ltd. Provides Operations Update

CALGARY, ALBERTA--(Marketwire - Oct. 19, 2012) - Since its last press release on August 13, 2012, Anderson Energy Ltd. ("Anderson" or the "Company") (TSX:AXL) has entered into agreements to sell 1,560 BOED of production (75% natural gas) for cash consideration of $37.5 million subject to normal closing adjustments (the "Transactions"). Approximately $18.75 million of the Transactions are scheduled to close before the end of October 2012 and the remainder are scheduled to close before the end of November 2012.

The Company's bank lines will step down to $70 million after the closing of the Transactions. Pro forma the Transactions, outstanding bank loans at September 30, 2012 would be approximately $52 million.

The properties being sold are non-strategic assets of the Company. Anderson has retained its position in both the large, well established Cardium light oil play and the emerging Second White Specks light oil play. The Company's current Cardium drilling inventory is 257 gross (177 net) locations of which 75 gross (56 net) wells have been drilled to date. The Company's Second White Specks horizontal light oil inventory is comprised of approximately 77 gross (42 net) additional locations. Anderson intends to resume its Cardium horizontal drilling operations with a one rig drilling program in the coming weeks.

Anderson had hedges of 1,500 bpd of oil production for the balance of 2012 using fixed price swaps at an average price of $103.87 WTI Canadian per barrel. The Company unwound 500 BOPD of these hedges for the last two months of the year and realized a gain of $450,000, leaving 1,000 bpd of oil production hedged for November and December 2012 at an average price of $104.30. The Company continues to monitor hedging opportunities for oil and natural gas for 2012 and 2013.

As previously announced, the Board of Directors has initiated a process to identify, examine and consider a range of strategic alternatives available to the Company with a view to enhancing shareholder value. The strategic alternatives considered may include, but are not limited to, a sale of all or a material portion of the assets of Anderson, either in one transaction or in a series of transactions, the outright sale of the Company, or a merger or other strategic transaction involving Anderson and a third party. The Board of Directors believes that the Company's shares trade at a significant discount to the value of the underlying assets, especially given its high quality oil production base, prospective horizontal oil drilling inventory and significant tax pools. The Board of Directors has established a special committee comprised of independent directors of the Company to oversee this process and has retained BMO Capital Markets and RBC Capital Markets as its financial advisors to assist the Special Committee and the Board of Directors with the process. The process was not initiated as a result of any particular offer.

The Transactions are the second set of assets to be sold as part of the strategic alternatives process. It is Anderson's current intention to not disclose developments with respect to its strategic alternatives process unless and until the Board of Directors has approved a specific transaction or otherwise determines that disclosure is necessary in accordance with applicable law. The Company cautions that there are no assurances or guarantees that the process will result in additional transactions or, if a transaction is undertaken, the terms or timing of such a transaction. The Company has not set a definitive schedule to complete its evaluation.


Certain statements in this news release including, without limitation, management's assessment of future plans and operations; benefits and valuation of the development prospects described herein; the expected proceeds from the Transactions and use thereof; timing of completion of the Transactions; potential results of the strategic alternative review process, including the possibility of further asset dispositions and use of proceeds therefrom, and enhancement of shareholder value; disclosure intentions with respect to the strategic alternative review process; commodity price outlook and general economic outlook may constitute "forward-looking information" (within the meaning of applicable Canadian securities legislation) or "forward-looking statements" (within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended) and necessarily involve risks and assumptions made by management of the Company including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodity prices; currency fluctuations; imprecision of reserves estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; adequate weather to conduct operations; sufficiency of budgeted capital, operating and other costs to carry out planned activities; wells not performing as expected; incorrect assessment of the value of acquisitions and farm-ins; failure to realize the anticipated benefits of acquisitions and farm-ins; inability to complete property dispositions or to complete them at anticipated values; delays resulting from or inability to obtain required regulatory approvals; changes to government regulation; inability to access sufficient capital from internal and external sources; and other factors, many of which are beyond the Company's control. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as the factors are interdependent, and management's future course of action would depend on its assessment of all information at the time. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and readers should not place undue reliance on the assumptions and forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Anderson's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( or at Anderson's website (

The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.


Disclosure provided herein in respect of barrels of oil equivalent (BOE) 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.

Contact Information

  • Anderson Energy Ltd.
    Brian H. Dau
    President & Chief Executive Officer
    (403) 262-6307