Capitol Energy Resources Ltd.

Capitol Energy Resources Ltd.

May 03, 2007 15:55 ET

Capitol Energy Resources Ltd. Announces All Cash Offer From Provident Energy Trust for Approximately $508 million to Acquire Capitol Energy

CALGARY, ALBERTA--(CCNMatthews - May 3, 2007) - Capitol Energy Resources Ltd. (TSX:CPX) ("Capitol") announces today that it has entered into an agreement (the "Agreement") pursuant to which Provident Energy Ltd. ("Provident"), a wholly owned direct subsidiary of Provident Energy Trust, will make an all cash offer (the "Offer") to acquire all of the issued and outstanding common shares on a fully diluted basis (the "Shares") of Capitol by way of a take-over bid. Under the Offer, Provident will acquire the Shares at a price of $8.16 per Share, valuing the proposed transaction at approximately $508 million, including the assumption of $41 million in net debt (net of option proceeds and transaction costs).

The Offer represents a 6.5% premium based on the 20-day weighted average trading price and a 10.0% premium based on the 30-day weighted average trading price to Capitol's shareholders for the period ending May 2, 2007. The acquisition metrics (net of estimated land value) with respect to the Offer are approximately $113,000 per flowing barrel of daily production based on 4,400 boe/d average production for the month of April 2007 and approximately $103,750 per flowing barrel of daily production based on 4,800 boe/d estimated production for the second half of 2007. On a reserves basis, the Offer represents approximately $33.34/boe of proved reserves and approximately $16.60/boe of proved plus probable reserves based on Capitol's December 31, 2006 reserve report prepared by McDaniel & Associates Consultants Ltd.

The Board of Directors of Capitol has unanimously approved the proposed transaction and have concluded that the transaction is in the best interest of its shareholders and will recommend that its shareholders accept the Offer. FirstEnergy Capital Corp. ("FirstEnergy") acted as exclusive financial advisor to Capitol and both FirstEnergy and Paradigm Capital Inc. have provided the Board of Directors of Capitol with fairness opinions that, subject to review of final documentation, the consideration to be received under the Offer is fair from a financial point of view to the holders of Capitol Shares.

The Offer will be subject to certain conditions, including the deposit of not less than 66 2/3% of the outstanding shares of Capitol (on a fully diluted basis), receipt of all required regulatory approvals and other customary conditions. In addition, Capitol has agreed that it will not solicit or initiate discussions or negotiations with any third party for any take-over bid or other business combination involving Capitol and Provident has reserved the right to match any competing proposals. Under certain circumstances, Capitol has agreed to pay a non-completion fee of $15.25 million to Provident. A take-over bid circular detailing the Offer is anticipated to be mailed to shareholders of Capitol on or about May 18, 2007, with closing anticipated in mid June 2007. The Directors and Officers of Capitol, representing approximately 14.5% of the issued and outstanding shares of Capitol on a fully diluted basis, have agreed to tender their shares, subject to certain exceptions, and have entered into lock-up agreements with Provident evidencing such commitment.

Capitol has cancelled its Annual and Special Meeting of Shareholders scheduled for May 10, 2007.


Capitol is a junior oil and gas, exploration and production company. Capitol's primary asset is a conventional Dixonville Montney 'C' oil pool, with 263 million barrels of original oil in place as at December 31, 2006. Capitol currently has approximately 53 million shares outstanding (57 million including outstanding dilutive securities).

Additional information about Capitol including, Capitol's December 31, 2006 financial statements and Management's Discussion and Analysis may be viewed on SEDAR ( or the Company's website (


Certain statements contained in this document are "forward-looking statements". The projections, estimates and beliefs contained in such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results or events to differ materially from those anticipated in any forward-looking statements. Capitol believes the expectations reflected in those forward-looking statements are reasonable; however Capitol cannot provide any assurance that these expectations will prove to be correct.

The term "boe" may be misleading, particularly is 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.

This news release shall not constitute an offer to sell, or the solicitation of an offer to buy, securities in the United States, or any province or territory of Canada, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The securities offered will not be, and have not been, registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of that Act.

The TSX has neither approved nor disapproved the contents of this press release.

Contact Information

  • Capitol Energy Resources Ltd.
    Monty Bowers
    President & CEO
    (403) 508-6321
    (403) 508-6309 (FAX)
    Capitol Energy Resources Ltd.
    Doug Dearing
    Vice President, Finance & CFO
    (403) 508-6320
    (403) 508-6309 (FAX)