Renegade Petroleum Ltd.
TSX VENTURE : RPL

Renegade Petroleum Ltd.

May 20, 2010 14:13 ET

Renegade Petroleum Ltd. Announces Asset Acquisition, Increased Operating Line and Increased Guidance

CALGARY, ALBERTA--(Marketwire - May 20, 2010) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES.

Renegade Petroleum Ltd. ("Renegade" or the "Company") (TSX VENTURE:RPL) is pleased to announce an asset acquisition (the "Acquisition") with a transaction value of $20.5 million. Renegade is also pleased to announce that it intends to increase its revolving credit facility from $30 million to $40 million upon successful closing of the Acquisition.

SUMMARY OF THE ACQUISITION

Through the Acquisition, Renegade is acquiring high quality, high netback, long reserve life, light oil assets focused in the Company's southeast Saskatchewan core area for total consideration of $20.5 million in cash. The consideration will be financed through available cash and the Company's bank line.

The producing properties are predominately operated with high working interests, 3D seismic coverage and control of key producing infrastructure and are associated with a light oil prospective undeveloped land base. The Acquisition provides Renegade with conventional high netback light oil assets and consolidates Renegade's core areas in Hastings/Alameda. The Acquisition adds more than 4,100 net undeveloped acreage.

The assets have the following characteristics:

Current production 225 Boepd
Proved plus probable reserves (1)(2) 1.1 million barrels
Percentage of proven reserves 65%
Proved plus probable RLI (1) 13.1 years
Undeveloped land (net) 4,100 acres
Operating netback (3) $48.00
     
  (1) Based on GLJ Petroleum Consultants Ltd. reserve report as at December 31, 2009 and mechanically updated internally to April 1, 2010.
  (2) Rounded from 1.075 million proved plus probable reserves.
  (3) Based on US$75.00/Bbl WTI and US$/CDN$ exchange rate of 0.95 and calculated by subtracting royalties and operating costs from revenues.

TRANSACTION METRICS

The Acquisition is accretive to Renegade on a per share basis on all key metrics. The transaction metrics are as follows:

Production (1) $83,822 per producing boe
Proved plus probable reserves (1) $17.54 per boe
Proven plus probable recycle ratio 2.7 times
     
  (1) Based on GLJ Petroleum Consultants Ltd. reserve report as at December 31, 2009 and mechanically updated internally to April 1, 2010.
  (2) Assumes $400/acre for undeveloped land.

STRATEGIC RATIONALE AND INCREASED GUIDANCE

The Acquisition represents the successful continuation of Renegade's business plan to acquire high quality light oil assets and high impact light oil resource play assets.

The Acquisition increases Renegade's drilling inventory in its light oil core areas of southeast Saskatchewan, the Viking in south central Saskatchewan and North Dakota. As a result of the transactions, Renegade will have pro forma production of 1,475 Boepd, proven plus probable reserves of 4.4 MMBoe, of which 68% are proven reserves, nearly 58,578 net acres of undeveloped land and a drilling inventory of 227.0 gross (152.0 net) exploitation and exploration locations, all for high quality light oil.

The Acquisition is accretive to 2010 forecast cash flow per share, reserves and production per share. As a result of the Acquisitions as well as successful drilling, Renegade is increasing its guidance for 2010 exit rate production from a range of 2,400 to 2,500 Boepd to new guidance of 2,600 to 2,700 Boepd.

THE ACQUISITION

Renegade has entered into an agreement (the "Acquisition Agreement") with a private company vendor to acquire all of the vendor's southeast Saskatchewan assets effective April 1, 2010 for consideration of $20.5 million of cash. Renegade has deposited $2.05 million under the terms of the Acquisition Agreement, which is refundable to Renegade if the Acquisition does not close, except in the event of default by Renegade. Closing of the Acquisition is expected to occur on or about June 18, 2010 and is subject to certain conditions customary for transactions of this nature and the receipt of all regulatory approvals.

BANK FINANCING

Renegade recently executed a letter agreement encompassing a new $30.0 million revolving credit facility underwritten by National Bank of Canada. This new credit facility is anticipated to be available in early June, and increased to $40 million upon successful closing of the Asset acquisition. Currently Renegade has no bank debt outstanding.

FINANCIAL ADVISORS

GMP Securities L.P. acted as financial advisor to Renegade with respect to the Acquisition.

CORPORATE INFORMATION

Renegade's common shares trade on the TSX Venture Exchange under the symbol RPL. Renegade currently has approximately 49.2 million shares outstanding. The Company's presentation can be viewed on its website at www.renegadepetroleum.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. More particularly, this press release contains forward-looking statements related to the Acquisition and its anticipated impact on Renegade; pro forma production, accretion to cash flow and 2010 exit production; expected increase in Renegade's operating line; Renegade's capital expenditure program; Renegade's drilling plans; the expected ability of Renegade to execute on its exploration and development program; and Renegade's anticipated reserves and production (both in terms of quantity and raw attributes) and Renegade's anticipated cash flow from operations using estimated benchmark prices.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Renegade, including: (i) with respect to the Acquisition and bank line of credit, that all conditions precedent to give effect to such transactions, including all regulatory approvals, will be obtained; (ii) with respect to capital expenditures, generally, and at particular locations, the availability of adequate and secure sources of funding for Renegade's proposed capital expenditure program and the availability of appropriate opportunities to deploy capital; (iii) with respect to drilling plans, the availability of drilling rigs, expectations and assumptions concerning the success of future drilling and development activities and prevailing commodity prices; (iv) with respect to Renegade's ability to execute on its exploration and development program, the performance of Renegade's personnel, the availability of capital and prevailing commodity prices; and (v) with respect to anticipated reserves, production and resulting cash flow, the accuracy of the reserves estimates, the ability to drill and operate wells on an economic basis, the performance of new and existing wells and accounting for risks typically associated with oil and gas exploration and production.

Although Renegade believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Renegade 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 failure to obtain necessary regulatory approvals, risks associated with the oil and gas industry in general (e.g., 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 production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.

The forward-looking statements contained in this document are made as of the date hereof and Renegade 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.

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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Renegade Petroleum Ltd.
    Michael Erickson
    President & CEO
    (403) 355-8922
    or
    Renegade Petroleum Ltd.
    Alex Wylie
    Vice-President, Finance & CFO
    (403) 410-3376