Renegade Petroleum Ltd.
TSX VENTURE : RPL

Renegade Petroleum Ltd.

March 13, 2012 07:57 ET

Renegade Petroleum Ltd. Announces Slave Point Strategic Asset Acquisition and $40 Million Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - March 13, 2012) -

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 that it has entered into an agreement with a publicly traded oil and gas issuer (the "Seller") to acquire certain assets in the Senex area of northern Alberta for cash consideration of $11.0 million ("the "Strategic Acquisition"). The land is contiguous to the Company's recently announced land purchased in the Senex area and will expand the Company's land position in the Slave Point play by 19 net sections.

The land is strategic to Renegade as the Company now controls the majority of the Slave Point reef complex in the Senex area. The Strategic Acquisition brings the Company's total prospective land to 51 net sections (over 32,000 net acres) in the Slave Point play. The Strategic Acquisition also includes key processing facilities, infrastructure, storage capacity as well as access to an all-season road which will allow Renegade to accelerate full scale development of its drilling program by up to 12 months.

In addition, Renegade is pleased to announce that it has entered into an agreement, on a bought deal basis, with a syndicate of underwriters led by GMP Securities L.P. and including Canaccord Genuity Corp., Dundee Securities Ltd., Macquarie Capital Markets Canada Ltd., Paradigm Capital Inc., TD Securities Inc., AltaCorp Capital Inc., FirstEnergy Capital Corp. and Raymond James Ltd. (the "Underwriters") for an offering of 7,500,000 common shares in the capital of Renegade ("Common Shares") at an issue price of $4.00 per Common Share and 2,084,000 "flow-through" Common Shares ("Flow Through Shares") at an issue price of $4.80 per Flow Through Share for aggregate gross proceeds of approximately $40.0 million (the "Financing"). Closing is expected to occur on or about March 30, 2012 (the "Closing Date"), and is subject to customary regulatory approvals. Renegade has also granted to the Underwriters an over-allotment option (the "Over-Allotment Option") to purchase, on the same terms as the Financing, up to an additional 1,125,000 Common Shares. The Over-Allotment Option is exercisable, in whole or in part, by the Underwriters at any time commencing on the Closing Date and for a period of 30 days following the Closing Date. The aggregate gross proceeds raised under the Financing will be approximately $44.5 million should the Over-Allotment Option be exercised in full. Closing of the Financing is not subject to the successful completion of the Strategic Acquisition.

STRATEGIC ACQUISITION

Under the terms of the Strategic Acquisition, Renegade has agreed to acquire the Senex properties for cash consideration of $11.0 million (subject to adjustment). The Strategic Acquisition is expected to close on March 30, 2012.

The acquisition metrics are as follows:

Transaction price (1) $11.0 million
Total land (net) 12,000 acres
Price per acre $917
(1) In addition to the $11.0 million transaction price, Renegade has granted the Seller a three percent royalty and will assume the cost of a horizontal well that has recently been completed by the Seller

In addition, pursuant to the Strategic Acquisition, Renegade is acquiring the following:

  • Existing infrastructure including, processing facilities, water disposal and storage capacity as well as access to all-season roads;
  • Proprietary 80% ownership of over 113 km2 of 3D seismic over existing producing pools in the Senex area;
  • 50 bbls/day of existing historical oil production from the Slave Point and Keg River formations; and
  • Up to an additional 75 net potential drilling locations targeting the Slave Point light oil resource play.

Upon completion of the Strategic Acquisition and together with the previously announced Senex and Joan land acquisitions, Renegade will own over 35 net sections (over 22,000 net acres) of contiguous land in the Senex area and will control the majority of the Slave Point reef complex in the Senex area. The existing vertical Slave Point production included in the Strategic Acquisition shows a similar production profile as the offset analog vertical wells at Sawn Lake, Otter and Red Earth. As a result of this comparison, and in conjunction with the comparable reservoir parameters, Renegade believes this new Slave Point core area is prospective for horizontal, multi-stage fracturing development and expects it to add an additional 75 net potential drilling locations to the Company's inventory. Following the completion of the Strategic Acquisition, Renegade believes it will have up to 200 potential drilling locations that are prospective for the Slave Point play.

As a result of the strategic infrastructure to be acquired pursuant to the Strategic Acquisition, the Company should be in a position to commence horizontal drilling operations in the Senex area late in the third quarter or early in the fourth quarter of 2012 and has accelerated its development plan on the play by up to 12 months. The associated infrastructure from the Strategic Acquisition, when acquired, will provide the Company with the ability to facilitate year round production and activity in the Senex area.

FINANCIAL ADVISORS

GMP Securities L.P. acted as financial advisor to Renegade with respect to the Strategic Acquisition. FirstEnergy Capital Corp. and Paradigm Capital Inc. acted as strategic advisors to Renegade.

FINANCING

Renegade is pleased to announce that it has entered into an agreement, on a bought deal basis, with a syndicate of underwriters led by GMP Securities LP. and including Canaccord Genuity Corp., Dundee Securities Ltd., Macquarie Capital Markets Canada Ltd., Paradigm Capital Inc., TD Securities Inc., AltaCorp Capital Inc., FirstEnergy Capital Corp. and Raymond James Ltd. for a short form prospectus offering of 7,500,000 Common Shares at an issue price of $4.00 per Common Share and 2,084,000 Flow Through Shares at an issue price of $4.80 per Flow Through Share for aggregate gross proceeds of approximately $40.0 million. Closing of the Financing is expected to occur on or about March 30, 2012, and is subject to customary regulatory approvals, including approval of the TSX Venture Exchange. Renegade has also granted to the Underwriters the Over-Allotment Option to purchase, on the same terms as the Financing, up to an additional 1,125,000 Common Shares. The Over-Allotment Option is exercisable, in whole or in part, by the Underwriters at any time commencing on the Closing Date and for a period of 30 days following the Closing Date. The aggregate gross proceeds raised under the Financing will be approximately $44.5 million, should the Over-Allotment Option be exercised in full. Closing of the Financing is not subject to the successful completion of the Strategic Acquisition.

The Common Shares and Flow Through Shares will be offered in each of the provinces of Canada other than Québec by way of a short form prospectus and the Common Shares will also be offered for sale in the United States on a private placement basis pursuant to exemptions from the registration requirements pursuant to Rule 144A and/or Regulation D of the United States Securities Act of 1933, as amended, in a manner that does not require the Common Shares to be registered in the United States and internationally, pursuant to applicable securities laws.

The net proceeds from the Financing will initially be used to repay outstanding indebtedness under the Company's credit facility, thereby freeing up borrowing capacity to accelerate development of the Slave Point play (including lands acquired under the Strategic Acquisition), continue Renegade's active land acquisition strategy in southeast Saskatchewan, accelerate the development of Renegade's facilities in southeast Saskatchewan and for general corporate purposes.

The securities referenced herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration requirements is available. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States.

CORPORATE INFORMATION

Renegade's common shares trade on the TSX Venture Exchange under the symbol RPL. Renegade currently has approximately 77.5 million common shares outstanding and 86.8 million common shares on a fully-diluted basis.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements. More particularly, this news release contains forward-looking statements related to: the Strategic Acquisition and its anticipated impact on Renegade's production, reserves, undeveloped acreage and drilling locations; the expected timing of the closing of the Strategic Acquisition; the anticipated closing date of the Financing; the use of proceeds from the Financing; the Company's capital exploration and development program; and other matters not specifically enumerated herein. Readers are cautioned that the foregoing list of factors should not be construed as exhaustive.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Renegade, including: (i) 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; (ii) 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; (iii) 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 (iv) with respect to anticipated closing dates, the receipt of all regulatory and stock exchange approvals. Additionally, due to the nature of the oil and natural gas industry, budgets are regularly reviewed in light of the success of expenditures and other opportunities which may become available to Renegade. Notwithstanding the Corporation's current intentions regarding the use of the proceeds from the Financing described above, there may be circumstances where a reallocation of funds may be necessary. While the Corporation anticipates that it will spend the funds available to it as set forth above, there may be circumstances where, for sound business reasons, a reallocation of the net proceeds may be necessary.

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 estimates and projections relating to production, costs and expenses; 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) and the failure to realize the expected benefits of the Strategic Acquisition.

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.

Meaning of Boe: When used in this press release, boe means barrel of oil equivalent on the basis of 1 boe to 6 thousand cubic feet of natural gas. Boe/d means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 boe for 6 thousand 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.

ANALOGOUS INFORMATION

Certain information in this news release may constitute "analogous information" as defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), including, but not limited to, information relating to the areas in geographical or geologic proximity to prospective exploratory lands held or to be to be held by Renegade. Such information has been obtained from government sources, regulatory agencies or other industry participants. Renegade believes the information is relevant as it helps to define the reservoir characteristics in which Renegade may hold an interest. Renegade is unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor. Such information is not an estimate of the reserves or resources attributable to lands held or to be held by Renegade and there is no certainty that the reservoir data and economics information for the lands held or to be held by Renegade will be similar to the information presented herein. The reader is cautioned that the data relied upon by Renegade may be in error and/or may not be analogous to such lands to be held by Renegade.

Neither the 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

    Renegade Petroleum Ltd.
    Alex Wylie
    Vice-President, Finance & CFO
    (403) 410-3376