Huron Energy Corporation

October 23, 2012 08:30 ET

Huron Energy Corporation Announces Agreement to be Acquired by Tourmaline Oil Corp.

CALGARY, ALBERTA--(Marketwire - Oct. 23, 2012) - Huron Energy Corporation ("Huron") is pleased to announce that it has entered into an agreement (the "Arrangement Agreement") with Tourmaline Oil Corp. ("Tourmaline") providing for the acquisition by Tourmaline of all of Huron's issued and outstanding shares pursuant to a statutory plan of arrangement under the Business Corporations Act (Alberta).

Under the terms of the Arrangement Agreement, Huron shareholders will receive 0.07644 Tourmaline common shares for each Huron share held. Tourmaline will also assume the debt of Huron, estimated at $24.6 million, after taking into account anticipated transaction costs, as at September 30, 2012. Based on Tourmaline's closing price on the Toronto Stock Exchange ("TSX") of $31.70 on October 22, 2012, the total transaction value is approximately $258.3 million, including the assumption of net debt.

The Board of Directors of Huron has unanimously approved and recommended that Huron shareholders vote their shares in favour of the transaction. Management, directors and certain shareholders of Huron representing approximately 65% of the issued and outstanding Huron shares have agreed to vote their shares in favour of the transaction.

The Arrangement Agreement provides for non-solicitation covenants, subject to the fiduciary obligations of the Board of Directors of Huron and the right of Tourmaline to match any Superior Proposal (as defined in the Arrangement Agreement). The Arrangement Agreement provides for a termination fee of $7.5 million payble by Huron in the event the transaction is not completed in certain circumstances.

Completion of the transaction is condition upon receipt of Huron shareholder approval and all required regulatory approvals, including Competition Act approval and TSX approval for the listing of the Tourmaline shares to be issued to Huron shareholders. Huron anticipates mailing an information circular to Huron shareholders by early November in connection with a special meeting to be held to consider the transaction.

RBC Capital Markets and Burnet, Duckworth & Palmer LLP are acting as exclusive financial and legal advisors, respectively, to Huron in connection with the transaction. RBC Capital Markets has provided to the Board of Directors of Huron its opinion that, as of the date of the Arrangement Agreement, the consideration under the transaction is fair from a financial point of view to the Huron shareholders.

About Huron Energy Corporation

Huron Energy Corporation is a Canadian, private, natural gas company, with headquarters in Calgary, Alberta, focused on exploration, development, and production of unconventional gas in the Montney and Doig formations in North East British Columbia. Huron currently produces approximately 5,500 boe per day, predominantly in the Montney gas condensate window, and holds approximately 53,000 acres of land across areas including Sunrise, Groundbirch, Septimus, Dawson, Sundown and Red Creek. Huron had proved plus probable reserves of approximately 46.2 million boe as reflected in its most recent independent reserve report as of August 31, 2012.

Forward Looking Information

Information in this press release contains forward-looking information including but not limited to the proposed acquisition of Huron by Tourmaline, the timing for the mailing of an information circular to shareholders of Huron, the holding of a Huron shareholders meeting and the receipt of all required approvals. Forward-looking information is not based on historical facts but rather on management's expectations regarding Huron's results of operations and general economic and capital market conditions. Such forward-looking information reflects management's current beliefs and assumptions and is based on information currently available to management of Huron. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including but not limited to, risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production, delays or changes to plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of geological interpretations; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environment risks), and the risk of commodity price and foreign exchange rate fluctuations. In addition the Arrangement Agreement is subject to a number of conditions which are typical for transactions of this nature. Failure to satisfy any of these conditions may result in the termination of the Arrangement Agreement. Although the forward-looking information contained herein is based upon assumptions which management believes to be reasonable, Huron cannot assure investors that actual results will be consistent with this forward-looking information. This forward-looking information is made as of the date hereof and Huron assumes no obligation to update or revise this information to reflect new events or circumstances, except as required by law.

BOE Equivalency

BOEs may be misleading, particularly if 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. In addition, as the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Contact Information

  • Huron Energy Corporation
    Bruce Shultz
    President
    403.264.1200

    Huron Energy Corporation
    Glenn Ruttan
    Vice President, Finance
    403.264.1200
    www.huronenergy.ca