Athlone Energy Ltd.

Athlone Energy Ltd.

July 10, 2008 23:40 ET

Daylight Resources Trust Announces Acquisition of Athlone Energy Ltd. Strategic Addition to Daylight's Wildmere Heavy Oil Core Area

CALGARY, ALBERTA--(Marketwire - July 10, 2008) - Daylight Resources Trust ("Daylight" or the "Trust")(TSX:DAY) and Athlone Energy Ltd. ("Athlone")(TSX VENTURE:ATH) are pleased to announce that they have entered into an agreement (the "Agreement") that provides for the acquisition of Athlone (TSX VENTURE:ATH) by Daylight (TSX:DAY) pursuant to a Plan of Arrangement. Pursuant to the Agreement, and subject to certain conditions, including court approval and approval of the securityholders of Athlone, Daylight will acquire all of the outstanding shares of Athlone for a price of $0.85 per share. The cash consideration represents a 12% premium to the 20 day weighted average trading price of Athlone on the TSX Venture Exchange for the period ended July 10, 2008. Total consideration for the transaction is approximately $32.8 million including the assumption of $2.6 million in debt.


Daylight's acquisition of Athlone is based on the synergistic fit of Athlone's assets adjacent to Daylight's Wildmere heavy oil core area. This complements a core area that has been a very active and important component of Daylight's low geological risk, repeatable drilling strategy. The addition of Athlone's assets adds an additional 17 development drilling locations into Daylight's portfolio. The transaction is consistent with Daylight's strategy of adding to our low-risk development inventory with opportunities that are complementary to our core capabilities. Given the highly synergistic nature of these assets, the new properties will be operated with existing personnel and no incremental G&A cost. A revised corporate presentation including a map showing the synergy between Daylight and Athlone's lands in Wildmere can be accessed on Daylight's website at

Anthony Lambert, President and CEO of Daylight stated, "This is another synergistic and strategic acquisition consistent with Daylight's strategy of adding to our core development areas and maintaining a balance in the Trust between low risk oil and natural gas opportunities."

Garry Lohuis, President and CEO of Athlone stated, "Our company has been very successful growing our production over the past three years. The Daylight offer represents excellent value to our shareholders for these heavy oil assets."


Operational Impact

- The 650 barrels of oil equivalent per day ("boed") of production associated with this acquisition, consists of over 95% heavy oil with a small amount of natural gas production.

- This transaction moderately increases Daylight's proportion of oil and natural gas liquids production to 46% from 45%, including the additional volumes from the previously announced Cadence transaction, which is consistent with our strategy of maintaining balance between the oil and natural gas in our portfolio.

- This transaction provides additional exposure within the high quality Wildmere region which complements Daylight's tight gas Cadomin play in Elmworth, continued development and waterflood implementation in the Cecil Kiskatinaw light oil pool, accelerating natural gas development opportunity in our core West Central area and significant CBM and shallow gas potential with over 200 drilling locations in Sylvan Lake.

Reserves Impact and Transaction Metrics

- Increases Daylight's Proved Plus Probable Reserves ("2P") by 1.9 million barrels of oil equivalent ("mmboe") to 84.3 mmboe, including the reserves associated with the previously announced Cadence transaction.

- Based on the total transaction cost of $32.8 million, the production acquisition cost is $50,500/boed and the 2P reserve acquisition cost is $17.90/boe.

- Increases Daylight's drilling inventory with 17 heavy oil development locations identified.

- The transaction is accretive to Daylight units on all conventional measures.


Daylight will provide additional guidance with respect to the Trust's production and capital budget upon successful completion of the transaction. The Athlone shareholder's meeting to vote on the Plan of Arrangement is anticipated to occur in early September 2008.

Board Approval

The Boards of Directors of Daylight and Athlone have approved the transaction and the Athlone Board has concluded that the transaction is in the best interests of the Athlone shareholders. Certain of the Athlone directors and officers, who own approximately 14% percent of the outstanding shares, have agreed to vote their Athlone shares in favor of the proposed combination. Three directors of Athlone, Messrs. Aubry, Fulop and Culbert, opposed the transaction.

Athlone has agreed that it will not solicit or initiate any discussions concerning any other business combination. Athlone has agreed to pay a non-completion fee of $1.4 million to Daylight in certain circumstances. In addition, Daylight has the right to match any competing proposal for Athlone in the event such a proposal is made.


Jennings Capital Inc. ("Jennings") is acting as exclusive financial and strategic advisor to Athlone with respect to this transaction. Jennings has advised the Board of Directors of Athlone, that subject to the review of definitive legal agreements, it is of the opinion, as of the date hereof, that the consideration to be received by Athlone shareholders pursuant to the proposed arrangement is fair from a financial point of view to Athlone shareholders.

Advisory Regarding 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", "anticipated", "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: the entities' petroleum and natural gas production, reserves, drilling opportunities, business strategy, future development and growth opportunities, prospects and asset base, the anticipated benefits from the transaction including operating efficiencies, cost reductions, future cash flows and debt levels, capital programs, future tax pools and positions, treatment under tax laws, and oil and natural gas prices.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Athlone and Daylight, including expectations and assumptions concerning: prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future well production rates; reserve and resource volumes; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the receipt, in a timely manner, of regulatory, securityholder and third party approvals. Although Athlone and Daylight believe 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 Athlone and Daylight can give no assurance that they will prove to be correct.

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 estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation or petroleum and natural gas and loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory, securityholder and other third party approvals; and changes in legislation, including but not limited to tax laws, royalty rates and environmental regulations. There are risks also inherent in the nature of the proposed transaction, including: failure to realize anticipated synergies or cost savings; risks regarding the integration of the two entities; incorrect assessments of the values of the other entity; and failure to obtain the required securityholder, court, regulatory and other third party approvals (or to do so in a timely manner). This press release also contains forward-looking statements and information concerning the anticipated completion of the proposed transaction and the anticipated timing for completion of the transaction. Athlone and Daylight have provided these anticipated times in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the time required to prepare and mail Athlone securityholder meeting materials; the timing of receipt of the necessary regulatory, court and other third party approvals; and the time necessary to satisfy the conditions to the closing of the transaction. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the transaction. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Athlone, Daylight or the combined entity are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (

The forward-looking statements and information contained in this press release are made as of the date hereof and Athlone and Daylight undertake 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" 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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