Daylight Resources Trust
TSX : DAY.UN
TSX : DAY.DB
TSX : DAY.DB.B
TSX : DAY.DB.C

Daylight Resources Trust

April 27, 2009 07:22 ET

Daylight Resources Trust Announces Acquisition of Private Oil & Gas Producer-Growing Trust's Total Production by 13% with Core West Central Assets

CALGARY, ALBERTA--(Marketwire - April 27, 2009) - Daylight Resources Trust ("Daylight" or the "Trust") (TSX:DAY.UN) is pleased to announce that we have entered into an agreement to acquire a private oil & gas producer ("PrivateCo") by way of plan of arrangement (the "Transaction"). PrivateCo's assets currently produce approximately 3,000 barrels of oil equivalent per day ("boe/d") with over 90% of this production operated and within Daylight's core West Central Alberta area, which represents an increase to Daylight's total production of approximately 13%. Daylight's internal evaluation of these assets indicates Proved plus Probable ("2P") reserves of approximately 6.9 million barrels of oil equivalent ("mmboe") with a 94% natural gas weighting, which represents an increase to Daylight's 2P reserves of approximately 10%. Daylight has also identified significant upside on these assets with over 75,000 net acres of undeveloped lands in highly prospective areas. High-impact drilling opportunities include multi-zone Cretaceous development at Obed, and there are multiple low risk drilling opportunities in the Upper Mannville at Whitecourt, plus Montney drilling opportunities at Kaybob. Total consideration for the Transaction consists of 7.25 million Daylight Trust Units and $32 million of cash, plus assumed net debt of approximately $25 million. Based on the preceding 5 day weighted average trading price of $7.15 per Daylight Trust Unit, the total Transaction value is approximately $109 million.

TRANSACTION RATIONALE

Daylight's acquisition of PrivateCo continues the Trust's strategy of pursuing counter-cyclical acquisition opportunities that bring favorably priced assets into our portfolio and enhances future growth prospects for our unitholders. Over 90% of PrivateCo's assets are in the West Central area, with approximately 1,500 boe/d of production in Obed, where Daylight is already a working interest partner, and has had a successful farmout, adding significant reserves and production for the Trust. At Obed, Daylight will now operate a portion of the play which has multiple additional, potentially high-impact, drilling locations in Daylight's on-going multi-zone Cretaceous development. The Whitecourt asset, which adds a large block of producing lands to our core West Central property, consists of a large gas in place Upper Mannville deposit with multiple low-risk, repeatable drilling opportunities. The Whitecourt property is operated with a 55% working interest and generates approximately 1,200 boe/d of working interest production. The Transaction also adds lands in highly prospective areas, including approximately 75,000 net acres of undeveloped lands, and includes additional lands prospective for the Montney in close proximity to Daylight's lands at Kaybob.

Anthony Lambert, President and Chief Executive Officer of Daylight stated, "It would be difficult to find a suite of assets that fit better within Daylight's core areas and expertise. These low risk drilling opportunities and stable, low-cost production additions will strengthen the Trust's bottom line and expand our already impressive drilling inventory."

In addition to this Transaction, the Trust continues to actively review a number of additional transactions in what we consider to be a favorable market for acquirors of both assets and producing entities. Daylight continues to be well positioned to pursue these opportunities with our financial strength and capacity to include a cash component within transactions.

SIGNIFICANT TRANSACTION HIGHLIGHTS

Operational and Financial Impact

- Increases production to approximately 26,000 boe/d upon closing, representing a 13% increase to Daylight's current 23,000 boe/d 2009 midpoint production guidance.

- Increases 2P reserves by 10% with the addition of approximately 6.9 mmboe for a combined reserve base of approximately 77 mmboe.

- Adds high-impact Obed drilling opportunities and low risk Whitecourt development opportunities, expanding the Trust's significant inventory of low geological risk, repeatable resource play assets.

- Accretive to funds from operations per unit (excluding hedging) with increased production and no additional general and administrative expenses.

- Adds 75,000 net acres of undeveloped land in highly prospective areas.

- The use of cash and Trust Units as consideration maintains the Trust's significant capacity to pursue additional strategic opportunities and maintains Daylight's financial flexibility.

Daylight will provide updated guidance reflecting the impact of this Transaction subsequent to closing of this Transaction.

Transaction Metrics

- Total Transaction value of approximately $109 million, with $8 million allocated to undeveloped land (approximately $105 per net acre), results in Transaction metrics of:

-- $33,700 per current flowing boe/d of production; and

-- $14.64 per boe of Proved plus Probable reserves acquired.

Transaction Details

The completion of the Transaction is subject to customary stock exchange, court and regulatory approvals, as well as the approval of at least 66 2/3 percent of the votes cast by PrivateCo shareholders present, in person or by proxy, at a PrivateCo shareholder's meeting to be called to consider the Transaction. It is expected that the PrivateCo shareholders meeting to vote on the arrangement and closing of the Transaction will occur in mid June 2009.

Approvals

Both the Board of Directors of Daylight and PrivateCo have unanimously approved the Transaction. PrivateCo's Board of Directors have represented to Daylight that they have unanimously determined that the proposed Transaction is in the best interests of PrivateCo and the PrivateCo shareholders, and have unanimously resolved to recommend that PrivateCo shareholders vote in favor of the Transaction. The PrivateCo Board of Directors, Officers and senior management, who own approximately 12 percent of the outstanding PrivateCo shares, have agreed to vote their PrivateCo shares in favor of the proposed Transaction.

PrivateCo has agreed that it will not solicit or initiate any discussions concerning any other business combination. PrivateCo has agreed to pay a non-completion fee of $4 million to Daylight in certain circumstances and Daylight has agreed to pay a non-completion fee of $4 million to PrivateCo in certain circumstances. In addition, Daylight has the right to match any competing proposal for PrivateCo in the event such a proposal is made.

GMP Securities L.P. and CIBC World Markets Inc., the Co-Lead Underwriters of Daylight's $150 million "bought-deal" offering of Trust Units previously announced on April 15, 2009 and expected to close on or about May 7, 2009 have, on behalf of the syndicate of underwriters, consented to the Transaction.

Advisor

Canaccord Capital Corporation is acting as exclusive strategic advisor to Daylight with respect to the Transaction.

A presentation detailing the synergy of the PrivateCo assets with Daylight's existing land base is located on Daylight's website at www.daylightenergy.ca.

Daylight's high-end technical team integrates and emphasizes our exploitation, reservoir engineering, production optimization, geological and geophysical expertise to identify and capture reserves and production addition opportunities for the delivery of long term value creation to our unitholders. Our team has developed a multi-year inventory of repeatable, low risk exploitation projects with substantial potential reserve additions on assets we currently own and control. Daylight's inventory includes a significant depth of prospects across our high quality asset base. Daylight has approximately 91 million Trust Units currently outstanding which trade on the TSX under the symbol DAY.UN. Daylight Series A, Series B, and Series C convertible debentures trade on the TSX under the symbols DAY.DB, DAY.DB.B and DAY.DB.C respectively.

Forward-Looking Statements

This press release contains statements that constitute "forward-looking statements" and "forward-looking information"(collectively "forward-looking statements") 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. More particularly and without limitation, this press release contains forward-looking statements concerning: the Transaction, the completion of the Transaction and the outcome of the Transaction, including Transaction values and accretion, estimates of petroleum and natural gas production, reserves and resources (including original gas in place), undeveloped land holdings, business strategy, future development and growth opportunities, prospects and asset base, the anticipated benefits from the Transaction including improved operating efficiencies, general and administrative cost efficiencies, future cash flows, debt levels, capital programs, and oil and natural gas prices.

The forward-looking statements in this press release are based on certain key expectations and assumptions made by 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, shareholder and third party approvals. Although Daylight believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Daylight can give no assurance that they will prove to be correct.

Since forward-looking statements 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 of 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, shareholder 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 shareholder, court, regulatory and other third party approvals (or to do so in a timely manner). This press release also contains forward-looking statements concerning the anticipated completion of the proposed Transaction and the anticipated timing for completion of the Transaction. Daylight has provided 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 shareholder 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 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 Daylight are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

The forward-looking statements 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 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.

Contact Information