NAL Oil & Gas Trust

NAL Oil & Gas Trust

April 06, 2009 07:00 ET

NAL Oil & Gas Trust Announces Early Renewal and Continuation of Existing Credit Lines

CALGARY, ALBERTA--(Marketwire - April 6, 2009) - NAL Oil & Gas Trust (the "Trust" or "NAL") (TSX:NAE.UN) is pleased to announce that it has renewed its revolving credit facility (the "Facility"). The Facility remains at the previously approved amount of Canadian $450 million with the same lending syndicate of major Canadian Chartered Banks and one United States based financial institution.

"The early renewal of our revolving credit facility is significant in light of the current global credit crisis. NAL's consistent reserve replacement performance and reliable underlying asset base provide a high degree of comfort to our lending syndicate in the Trust's ability to meet its debt obligations. The credit renewal now gives NAL the financial flexibility to pursue opportunities that may present themselves in the market," said Keith Steeves, NAL's Vice President, Finance and Chief Financial Officer.

At December 31, 2008, NAL had drawn $282 million, or 63%, of the Facility representing a net debt to 12 months trailing cash flow ratio of 1.0 times (net debt at year-end was $319 million). The Facility is due for renewal annually, with the next renewal scheduled for April 2010. The Facility requires monthly interest payments at a specified spread over the Banker's Acceptance ("BA") rate. Using current BA pricing, and incorporating existing interest rate hedges, NAL expects that its effective interest rate in 2009 will be 4.0-4.5%.

NAL's banking syndicate consists of the following financial institutions:

- Bank of Montreal

- Royal Bank of Canada

- Canadian Imperial Bank of Commerce

- Bank of Nova Scotia

- Alberta Treasury Branches

- Union Bank of California

NAL's management has authorization to fix the interest rate on up to 50% of current outstanding bank debt for periods of up to five years. As at March 30, 2009, NAL had seven interest rate swaps representing 46% of bank debt outstanding as summarized in the table below.

Interest Rate Contracts - Floating for Fixed Rate

Notional Fixed
Amount Counterparty Floating Rate
Contract Effective Date (C$MM) Term Rate (Receive) (Pay)
Swap December 23, 2008 39 3 yrs. to CAD-BA-CDOR 3 month 1.5864%
Dec. 23,
Swap January 30, 2009 22 4 yrs. to CAD-BA-CDOR 3 month 1.3850%
Jan. 30,
Swap January 30, 2009 22 5 yrs. to CAD-BA-CDOR 3 month 1.5100%
Jan. 30,
Swap March 5, 2010 14 3 yrs. to CAD-BA-CDOR 3 month 1.8750%
Mar. 5,
Swap March 5, 2010 4 yrs. to CAD-BA-CDOR 3 month 1.9850%
14 Mar. 5,
Swap March 19, 2010 14 3 yrs. to CAD-BA-CDOR 3 months 1.8500%
Mar. 19,
Swap March 30, 2010 14 4 yrs. to CAD-BA-CDOR 3 months 1.9300%
---- Mar. 30, --------
Total 139 1.6740%

In addition, NAL had Convertible Unsecured Subordinated Debentures of $79.7 million outstanding at December 31, 2008. The debentures have a face value of $1,000, coupon rate of 6.75% and mature on August 31, 2012. Interest on these debentures is paid semi-annually in arrears, on February 28 and August 31, and the debentures are convertible at the option of the holder at anytime into trust units at a conversion price of $14.00 per trust unit. The debentures are redeemable by the Trust at a price of $1,050 per debenture on or after September 1, 2010 and on or before August 31, 2011, and at a price of $1,025 per debenture on or after September 1, 2011 and on or before August 31, 2012. On redemption or maturity the Trust may opt to satisfy its obligation to repay the principal by issuing trust units.

At December 31, 2008, NAL had total net debt (including convertible debentures) of $399 million outstanding, representing a total net debt to 12 months trailing cash flow ratio of 1.28 times.

Forward Looking Statements

This press release contains statements that constitute "forward-looking information" or "forward-looking statements" (collectively "forward-looking information") within the meaning of applicable securities legislation. This forward-looking information includes, among others, statements regarding NAL's expected effective interest rate in 2009 and other expectations, objectives, assumptions and statements about possible future events, conditions, results of operations.

Various assumptions were used in drawing the conclusions or making the forecasts contained in the forward-looking information contained in this press release. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by NAL and described in this press release. Undue reliance should not be placed on forward-looking information. The material risk factors include, but are not limited to changes in interest rates (including BA rates) and exchange rates and the results of NAL's hedging and risk mitigation strategies. Readers are cautioned that the foregoing list of risk factors is not exhaustive.

Forward-looking information is based on the estimates and opinions of NAL's management at the time the information is released.

About NAL

NAL Oil & Gas Trust provides investors with a yield-oriented opportunity to participate in the Canadian Upstream Conventional Oil and Gas Industry. The Trust generates monthly cash distributions for its Unitholders by pursuing a strategy of acquiring, developing, producing and selling crude oil, natural gas and natural gas liquids from pools in southeastern Saskatchewan, central Alberta, northeastern British Columbia and Lake Erie, Ontario. Trust units trade on the Toronto Stock Exchange under the symbol "NAE.UN".

Contact Information

  • NAL Oil & Gas Trust
    Clayton Paradis
    Manager, Investor Relations
    (403) 294-3620 or Toll Free: 1-888-223-8792
    (403) 515-3407 (FAX)