C&C Energia Ltd.

March 25, 2011 08:26 ET

C&C Energia Enters Into Agreement to Acquire Oil & Gas Assets in Colombia and Announces a $100,000,000 Bought Deal Equity Offering

CALGARY, ALBERTA--(Marketwire - March 25, 2011) -


C&C Energia Ltd. (TSX:CZE) ("C&C" or the "Corporation") is pleased to announce that its indirect wholly owned subsidiary Grupo C&C Energia (Barbados) Ltd. ("Grupo C&C"), has signed a purchase and sale agreement with Ramshorn International Limited ("Ramshorn"), to acquire a company which will hold certain of Ramshorn's oil and gas properties in Colombia (the "Acquisition"). In addition, C&C has entered into an engagement letter agreement with a syndicate of underwriters with respect to a $100 million "bought deal" public offering of subscription receipts.


The purchase price of the acquisition is US$89 million (subject to certain customary closing adjustments), payable in cash, with an effective date of January 1, 2011. The oil and gas properties, located in the oil rich Central Llanos Basin, are comprised of a 70% operated interest in the Cachicamo E&P Block comprised of 87,646 acres (61,532 net acres) and a 50% non-operated interest in the Pajaro Pinto Exploration Block comprised of 60,080 acres (30,040 net acres). C&C currently holds the 30% interest in the Cachicamo Block that Ramshorn does not own and is the operator and 50% working interest owner of the Pajaro Pinto Block.

The Cachicamo Block currently produces approximately 1,400 bopd (980 bopd net to the acquired interest) of light oil and is anticipated to average 1,860 bopd (1,300 bopd net to the acquired interest) for 2011. Reserves, evaluated in accordance with NI 51-101 by Lonquist & Company, LLC, effective as of December 31, 2010, are 2.27 million barrels Proven (IP), 2.92 million barrel Proven & Probable (2P) and 3.74 million barrels Proven & Probable & Possible (3P). In addition, C&C anticipates the drilling of three development wells and three exploration wells on the Cachicamo Block in 2011. Cachicamo is covered with an extensive 3-D seismic survey and there are several undrilled exploration targets identified by C&C on this data.

The Pajaro Pinto exploration Block, comprised of 60,080 acres, is located approximately 50 km southwest of the Cachicamo acreage. An extensive 3D seismic survey was completed on these lands in 2010 with C&C as operator. Up to 5 exploration prospects were identified and C&C plans to drill at least two prospects this year with the first well to spud in the second quarter of 2011.

Richard A. Walls, President and CEO of C&C stated that, "the acquisition of these assets is not only accretive to C&C but is also strategic to C&C's holdings in the Llanos Basin of Colombia. Cachicamo is adjacent to C&C's major producing property on the Cravoviejo E&P Block and consolidation of Cachicamo production with C&C's 100% owned Cravoviejo production facilities is expected to result in significant cost and efficiency savings over the life of the property. In addition we have identified several attractive structural prospects with our extensive 3-D seismic on both blocks that we intend to commence drilling on this year."

Closing of the proposed Acquisition is subject to customary closing conditions including the receipt of all necessary regulatory approvals. C&C expects that the transaction will close in late April, 2011.

Bought Deal Equity Offering

C&C has entered into an agreement, on a bought deal basis, with a syndicate of underwriters led by FirstEnergy Capital Corp. and including Canaccord Genuity Corp., Cormark Securities Inc., TD Securities Inc. and CIBC World Markets Inc. for an offering (the "Financing") of 8,300,000 subscription receipts ("Subscription Receipts") at a price of $12.10 per Subscription Receipt to raise gross proceeds of approximately $100 million. C&C will grant the underwriters an option to purchase an additional 1,245,000 Subscription Receipts, exercisable at the offering price for a period of 30 days from the closing date for additional gross proceeds of up to $15,064,500.

Closing of the Financing is expected to occur on or about April 21, 2011 and is subject to customary conditions and regulatory approvals, including the approval of the TSX.

The net proceeds of the Financing will be used to fund the cash purchase price payable by Grupo C&C pursuant to the Acquisition, with any amounts in excess of the cash purchase price to be used for C&C's 2011 exploration and development program and for general working capital purposes. The Subscription Receipts will be issued pursuant to a short form prospectus to be filed by C&C in each of the provinces of Canada and will also be offered for sale internationally pursuant to applicable registration or prospectus exemptions as permitted.

The gross proceeds of the Financing will be held in escrow pending the completion of the Acquisition. If the Acquisition is completed on or before July 1 2011, the net proceeds will be released to C&C and each Subscription Receipt will be exchanged for one common share of C&C for no additional consideration. If the Acquisition is not completed on or before July 1, 2011, if the Acquisition Agreement is terminated at an earlier time, or if C&C advises the Underwriters or announces to public that it is not proceeding with the Acquisition, the holders of Subscription Receipts will receive a cash payment equal to the offering price of the Subscription Receipts and any interest that was earned thereon during the term of the escrow.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities of C&C in the United States. The Subscription Receipts described in this news release (and any common shares of C&C issued upon the exercise of the Subscription Receipts) have not been and will not be registered under the United States Securities Act of 1933, as amended, or the securities laws of any state and may not be offered, sold or delivered in the United States absent an exemption from registration.


The Corporation, through its subsidiary Grupo C&C Energia (Barbados) Ltd., is engaged in the exploration for, the development and production of, oil resources in Colombia. Its strategy is to develop producing oil assets by appraising and developing existing discoveries and exploring in areas assessed by management to be of low to moderate risk.

Cautionary Statement Regarding Forward-Looking Information

The information and statements in this news release contains certain forward-looking information. This forward looking information relates to future events or C&C's future performance. In particular, this document contains forward-looking information and statements regarding: (i) the completion of the Financing and the issuance of the Subscription Receipts, (ii) the issuance of common shares of C&C on the exercise of the Subscription Receipts, (iii) the use of proceeds of the Financing, (iv) the expected completion of the Acquisition, including the ability of C&C to satisfy all necessary conditions to the closing of the Acquisition, (v) crude oil reserve volumes associated with the properties to be acquired, and (vi) expected production from the properties to be acquired. All statements other than statements of historical fact may be forward-looking information. This forward-looking information is subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward looking information. The outcome and timing of the proposed Acquisition and Financing, as well as C&C's actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking information and, accordingly, no assurances can be given that any of the events anticipated by the forward looking information will transpire or occur or, if any of them do, what benefits that C&C will derive from them. C&C's forward-looking information is expressly qualified in its entirety by this cautionary statement. Except as required by law, C&C undertakes no obligation to publicly update or revise any forward-looking.

Contact Information

  • C&C Energia Ltd.
    Richard A. Walls
    President and Chief Executive Officer
    C&C Energia Ltd.
    Ken Hillier
    Chief Financial Officer