Beaumont Energy Inc.

March 18, 2015 16:29 ET

Beaumont Energy Inc. Enters Into Arrangement Agreement

CALGARY, ALBERTA--(Marketwired - March 18, 2015) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Beaumont Energy Inc. ("Beaumont" or the "Corporation") is pleased to announce that it has entered into an arrangement agreement (the "Arrangement Agreement") with Whitecap Resources Inc. ("Whitecap") (TSX:WCP), pursuant to which Whitecap will, subject to certain conditions, acquire all of the issued and outstanding common shares of Beaumont for total consideration of approximately $587.5 million including the assumption by Whitecap of Beaumont's net debt, which is estimated to be $70.5 million as at February 28, 2015 after accounting for proceeds from the exercise of dilutives and severance and transaction costs (the "Arrangement"). "We are extremely pleased that we have entered into an Arrangement with Whitecap and are able to participate in the continued growth and development of this resource as Whitecap shareholders," said Bob Chaisson, President and CEO of Beaumont.

Under the terms of the Arrangement Agreement, Beaumont shareholders will receive, at their election, for each common share of Beaumont ("Beaumont Shares") held: (i) $5.62 cash; or (ii) 0.40 of a Whitecap common share ("Whitecap Shares"); or (iii) a combination of cash and Whitecap Shares. The cash amount payable to Beaumont shareholders is subject to a maximum aggregate amount of $103.4 million.

Upon completion of the Arrangement, Beaumont shareholders will be eligible to receive Whitecap's monthly dividend. Dividends are payable on a monthly basis on or around the 15th day of each month. The first dividend Beaumont shareholders will be eligible to receive is the May dividend expected to be payable in the month of June to shareholders of record on May 31, 2015.

The Board of Directors of Beaumont has unanimously approved the Arrangement, determined that the consideration to be received by the Beaumont shareholders is fair to Beaumont shareholders, that the Arrangement is in the best interests of Beaumont and recommend that Beaumont shareholders vote their Beaumont shares in favour of the Arrangement. The directors, officers and major shareholders of Beaumont representing approximately 60% of the fully diluted outstanding Beaumont Shares, have entered into support agreements pursuant to which they have agreed to vote their Beaumont Shares in favour of the Arrangement. An information circular describing the Arrangement is expected to be mailed to Beaumont security holders on or before April 9, 2015 for a special meeting of shareholders (the "Meeting") scheduled to take place on or before May 8, 2015. Closing is subject to certain conditions, including the receipt of court and other regulatory approvals.

FINANCIAL ADVISORS

FirstEnergy Capital Corp. is acting as exclusive financial advisor to Beaumont with respect to the Arrangement and has provided the Board of Directors of Beaumont with an opinion that, subject to the review of final documentation, the consideration to be received under the Arrangement is fair, from a financial point of view, to Beaumont shareholders.
In the event the Arrangement does not proceed, under certain circumstances, Beaumont and Whitecap have agreed to a non-completion fee of $19 million payable to Whitecap by Beaumont. The Arrangement Agreement also provides for customary non-solicitation covenants including Beaumont's right to respond to superior proposals and Whitecap's right to match any such proposal.

ACQUISITION METRICS

Beaumont Production and Reserves

  • Proven reserves - 27.2 MMBOE (1)
  • Proven plus Probable reserves - 31.5 MMBOE (1)
  • Current production of 5,100 BOE/d (97% oil/NGLs)

The estimated acquisition metrics are as follows:

  • $115,200 per producing BOE/d
  • $21.60 per proved BOE (1)
  • $18.67 per proved plus probable BOE (1)
  1. Reserves estimates are based on Whitecap's internal evaluation and were prepared by a member of Whitecap's management who is a qualified reserves evaluator in accordance with National Instrument 51-101 effective March 1, 2015. Whitecap's reserve estimates do not materially differ from Beaumont's independent reserve evaluation.

"The Arrangement is a culmination of over two years of exploration and development over which the Corporation grew production from 700 BOE/d to current production of 5,100 BOE/d. The Arrangement is an opportunity for Beaumont shareholders to realize value for the Company's assets," said Bob Chaisson, President and CEO of Beaumont.

Beaumont is a private Calgary, Alberta based corporation engaged in the exploration, development and production of oil and natural gas. The Corporation is focused on the exploitation of its Viking light oil resource lands in the Kerrobert area of Saskatchewan. The Beaumont team has a solid track record of building shareholder value and based on the initial financing completed, Beaumont generated over a 180% return over 25 months.

Whitecap is a dividend paying, oil-weighted company focused on providing sustainable monthly dividends to its shareholders and per share growth through a combination of accretive oil-based acquisitions and organic growth on existing and acquired assets.

Reader Advisories

Forward Looking Statements: This news release contains forward-looking statements relating to the Corporation, including with respect to Whitecap's monthly dividend. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.

These forward-looking statements are based on various assumptions including expectations regarding the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; the timing, location and extent of future operations; anticipated timing and results of capital expenditures; estimates of future production; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; future exchange and interest rates; impact of increasing competition and ability to market oil and natural gas successfully. While Beaumont considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, 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 reserve estimates; environmental risks; general economic conditions in Canada, the U.S. and globally; ability to access sufficient capital from internal and external sources; and that the Arrangement may not be completed. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Beaumont believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this news release and the Corporation 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.

Sales volumes are commonly expressed on a barrel of oil equivalent ("BOE") basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet ("MCF") to one barrel of oil. The intention is to sum oil, natural gas liquids and natural gas measurements units into one basis for improved analysis of results and comparisons to other industry participants. BOE's and Mcf equivalents may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet to one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

All financial information, unless otherwise noted, has been prepared in accordance with Canadian generally accepted accounting principles (GAAP), specifically International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board, within Part 1 of the Canadian Institute of Chartered Accountants Handbook, which is within the framework of International Financial Reporting Standards (IFRS). Certain financial measures in this news release are not prescribed by GAAP.

These non-GAAP financial measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measures are included because management uses the information to analyze operating performance, leverage and liquidity, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

This news release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, nor shall there be any sale of securities mentioned in this news release in any state in the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of any such state.

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