Daylight Energy Ltd.

Daylight Energy Ltd.

December 01, 2010 02:01 ET

Daylight Energy Provides Update on Non-Core Asset Dispositions and Redemption of Convertible Debentures

CALGARY, ALBERTA--(Marketwire - Dec. 1, 2010) - Daylight Energy Ltd. ("Daylight" or the "Corporation") (TSX:DAY) is pleased to announce that the Corporation has executed purchase and sale agreements relating to the disposition of certain non-core assets for gross cash proceeds of approximately $70 million, prior to customary closing adjustments. These dispositions include 8 separate transactions with aggregate production of approximately 1,500 boe/d (50% natural gas / 50% liquids) which generates a positive transaction metric of over $46,000 per flowing boe/d. Four of the transactions have closed concurrent with execution of the purchase and sale agreements during Q4 2010, with the other 4 transactions expected to close in December 2010 with effective dates of October 1, 2010. In addition, Daylight has executed letters of intent and is in discussions with several other parties regarding the disposition of further non-core assets with additional aggregate production of approximately 1,500 boe/d.

These dispositions are a continuation of Daylight's strategic repositioning of our portfolio towards growth by monetizing non-core assets and focusing our financial and technical resources on our core growth assets at Pembina, West Central Alberta and Elmworth in the Deep Basin. The net proceeds from these dispositions will initially be used to repay bank indebtedness under Daylight's credit facilities. Daylight's mid year credit facility review has been completed and our borrowing base has been adjusted to $625 million. This adjustment reflects the sale, and anticipated sale, of the above noted non-core assets plus other non-core asset dispositions completed earlier during 2010 for combined cumulative proceeds of approximately $200 million, net of the positive impact of our highly successful 2010 internal organic growth program.

The disposition transactions that have not yet closed are subject to customary approvals and other industry standard closing conditions. There is no guarantee that these disposition transactions will be completed or that definitive purchase and sale agreements will be negotiated with parties interested in Daylight's other non-core assets offered for disposition.

FirstEnergy Capital Corp. has acted as exclusive financial advisor to Daylight with respect to the non-core asset dispositions.

Redemption of Series B, 8.5% Convertible Debentures

Daylight has also completed the previously announced redemption of our Series B, 8.5% convertible unsecured subordinated debentures ("Series B Debentures"). Other than $2.65 million aggregate principal amount of Series B Debentures which were redeemed by Daylight through the issuance of 289,241 common shares, all of the Series B Debentures were converted prior to the November 23, 2010 redemption date. As a result, an aggregate of 6,166,793 common shares were issued upon conversion and redemption of the $53.2 million face value of Series B Debentures that were outstanding as at September 30, 2010. All interest accrued and unpaid on the Series B Debentures up to but excluding the redemption date was paid in cash. The redeemed Series B Debentures (DAY.DB.B) have been cancelled and delisted from the Toronto Stock Exchange ("TSX"). Daylight's remaining convertible debentures outstanding have a combined face value of $247.5 million composed of $75.0 million of Series C Convertible Debentures and $172.5 million of Series D Convertible Debentures.

Daylight is a growing intermediate light oil and natural gas producing company with a high quality suite of resource play assets in Western Canada. Our highly focused team utilizes our technical expertise in exploitation, development and acquisitions to create long-term value for our shareholders. Our team has developed a multi-year inventory of repeatable, low risk exploitation resource play projects with substantial potential reserve additions on assets we currently own and control in the premier Pembina Cardium light oil fairway and Deep Basin areas of Alberta and British Columbia.

Daylight has approximately 210 million common shares outstanding which trade on the TSX under the symbol DAY. Daylight Series C and Series D convertible debentures trade on the TSX under the symbols DAY.DB.C and DAY.DB.D, respectively.

A corporate presentation is available on Daylight's website at


Forward-Looking Information and Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward-looking statements and information concerning Daylight's intention to dispose of certain non-core assets.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Daylight, including expectations and assumptions concerning: prevailing and future commodity prices and exchange rates; applicable royalty rates and tax laws; future production rates; the performance of existing wells; application of existing technologies and future advancements in technology to Daylight's operations and drilling activities; the success obtained in drilling new wells; the inventory of new drilling locations; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services, including but not limited to completion equipment and services; adequate weather and environmental conditions for drilling and completion activities, including transportation of associated equipment; the receipt, in a timely manner, of regulatory and third party approvals; the receipt of required regulatory and other third party approvals for the non-core asset dispositions, satisfaction of other closing conditions relating to such dispositions and Daylight's ability to negotiate terms of definitive purchase and sale agreements with parties interested in Daylight's non-core assets offered for disposition.

Although Daylight believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Daylight can give no assurance that they will prove to be correct. There is no representation by Daylight that actual results achieved during the periods identified in this press release will be the same in whole or in part as those forecast.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the oil and gas industry in general such as: operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource (including original oil in place) estimates; the uncertainty of estimates and projections relating to production, costs and expenses; health, safety and environmental risks; risks associated with weather and the impact on drilling and completion activities and the transportation of associated equipment; commodity price and exchange rate fluctuations; marketing and transportation of petroleum and natural gas and loss of markets; environmental risks; competition; risks associated with utilizing existing technologies and future technological advancements in Daylight's operations and drilling activities; failure to realize the anticipated benefits of acquisitions; risks regarding the integration of acquired entities and assets; incorrect assessment of the values of acquisitions; Daylight's ability to obtain all third party and regulatory approvals necessary to dispose of the non-core asset and Daylight's, and the other parties to the non-core disposition transactions, ability to satisfy the closing conditions to complete the sale of the non-core assets and Daylight's ability to negotiate terms of definitive purchase and sale agreements with parties interested in Daylight's other non-core assets offered for disposition. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect the business, operations or financial results of Daylight are included in reports on file with applicable securities regulatory authorities, including but not limited to Daylight Resources Trust's Annual Information Form for the year ended December 31, 2009 and Daylight Resources Trust's Notice of Annual and Special Meeting and Information Circular and Proxy Statement dated April 7, 2010, each of which may be accessed on Daylight Resources Trust's (the predecessor to Daylight) SEDAR profile at

The forward-looking statements and information contained in this press release are made as of the date hereof and Daylight undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Barrels of Oil Equivalent

"Boe" or "barrel of oil equivalent" means barrel of oil equivalent on the basis of 1 Boe to 6,000 cubic feet of natural gas. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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