Rider Resources Ltd.

Rider Resources Ltd.

March 27, 2007 09:01 ET

Rider Resources Ltd. Announces Significant Acquisition and Equity Financing

CALGARY, ALBERTA--(CCNMatthews - March 27, 2007) -


Rider Resources Ltd. (TSX:RRZ) ("Rider" or the "Company") today announced that it has entered into an agreement to acquire certain oil and natural gas interests in the West Central Alberta areas of Wapiti South and Ferrier. The Acquisition has an effective date of February 1, 2007 and is expected to close on or about May 15, 2007, with the closing being subject to customary industry conditions. Rider's total consideration under the agreement is $208.0 million, subject to normal closing adjustments, and will be financed through a concurrently announced equity offering, as well as increased available credit facilities, both as described below.

This Acquisition is a unique high-quality, high netback natural gas opportunity which allows the Company to expand its exploration and development program in West Central Alberta.

The key attributes of this Acquisition are:

- Current production of approximately 4,000 boe per day. In order to maximize reserve recovery, Rider intends to restrict production in the Ferrier area resulting in total production of about 3,600 boe per day (comprised of 17.0 mmcf per day of natural gas and 770 bbls per day of natural gas liquids).

- Operating costs of $3.25 per boe resulting in strong netbacks.

- Proved plus probable reserves, as estimated by the Company's independent engineering firm, Paddock Lindstrom and Associates ("PLA") of approximately 8.1 million boes proven and 11.9 million boes proven plus probable.

- Large contiguous land blocks adjacent to Rider's core regions which will add approximately 44,000 net undeveloped acres and increases Rider's net undeveloped land base by 40 per cent to 152,000 net acres.

- Ownership in two major gas processing facilities in Wapiti South.

Acquisition Metrics

The undeveloped land, seismic data, and processing income assocated with the Acquisition have an aggregate value of about $21.0 million. The estimated closing adjustments from February 1, 2007 to May 15, 2007 are $8.0 million. the resutling net acquisition cost of $179.0 million results in attractive on-stream costs of $49,720 per producing boe based on 3,600 boe per day of production, and a proved plus probable reserve addition cost, based on PLA's reserve estimate, of $21.85 per boe proven and $15.05 per boe proven plus probable.

Wapiti South

The Wapiti South area is adjacent to Rider's lands in the Karr and Waskahigan areas of Alberta. The interest being acquired has current production of approximately 2,800 boe per day (12.7 mmcf per day of natural gas and 650 bbls per day of natural gas liquids). The acquisition also includes 143,940 gross acres (57,620 net) of land of which 41,199 net acres is undeveloped. As well Rider will acquire an ownership interest in two significant natural gas plants in the area which allow low cost processing of future natural gas volumes. Rider has identified 14 drilling locations and many recompletion opportunities in Wapiti South. Certain portions of the Acquisition in Wapiti South are subject to Rights of First Refusal.


In the Ferrier area, the Company is acquiring an additional 65 per cent interest in a well in which Rider currently has 22 per cent working interest. With this acquisition the Company will own 87 per cent of the well and associated undeveloped acreage and will assume operatorship. The well's total production is currently 2,000 boe per day. Rider believes prudent operations of this well will require the well's production rate be reduced in order to maximize recovery of the reserves. This well was drilled in 2004 into the Banff formation and to date has produced over 10 bcf of natural gas.

Forecast Guidance

Rider forecasts 2007 average production to be approximately 12,000 boe per day, assuming a May 15, 2007 closing date and estimated total production at closing to be 13,600 boe per day.


In conjunction with the Acquisition, Rider has entered into an agreement with a syndicate of underwriters led by FirstEnergy Capital Corp. and including GMP Securities LP, Tristone Capital Inc., Scotia Capital Inc. and Orion Securities Inc. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase for resale to the public, on a bought deal basis, 7,500,000 subscription receipts for common shares of Rider (the "Subscription Receipts") at a price of $7.25 per Subscription Receipt for aggregate gross process of $54.375 million.

Each Subscription Receipt will represent the right to receive one common share of Rider, without the payment of any additional consideration, on the closing of the Acquisition. The proceeds from the offering of Subscription Receipts will be deposited in escrow pending the closing of the Acquisition. If the Acquisition closes on or before June 30, 2007, the net proceeds from the offering of the Subscription Receipts will be released to Rider and used by Rider to pay a portion of the Acquisition price.

The Subscription Receipt offering is subject to certain conditions including normal regulatory approvals. The Subscription Receipts will be offered in certain provinces of Canada by way of a short form prospectus. The closing of the Subscription Receipt offering is expected to occur on or about April 19, 2007.

As part of the acquisition, Rider's credit facilities will be increased to $230 million. Scotia Capital has also provided an equity bridge facility of $110 million which can be utilized for this transaction. In addition, Scotia Capital has been retained to market an issue of US$100 million Second Lien Term Debt. It is expected that the bridge facility will not be totally utilized due to the concurrently announced equity financing and will be replaced with long term debt shortly after closing.

FirstEnergy Capital Corp. and Scotia Waterous have acted as financial co-advisors on this transaction.

Conference Call

Rider will host a conference call today at 8am Mountain Daylight Time (10 am Eastern Daylight Time). The call in numbers are 410-9171 for Calgary callers and 1-866-542-4238 for all other callers. The call will be available for replay after it's completion at 1-800-408-3053 with code 3218830.

This News Release is not an offer to sell or a solicitation of offers to by the Subscription Receipts in the United States. The Subscription Receipts have not been and will not be registered under the United States Securities Act and may not be offered or sold in the United States except in transactions exempt from such registration.

Rider is an independent Canadian oil and natural gas exploration, development and production company with its common shares trading on the Toronto Stock Exchange under the symbol "RRZ".


Certain information regarding the Company in this news release including management's assessment of future plans and operations, production estimates, drilling inventory and wells to be drilled, timing of drilling and tie-in of wells, productive capacity of new wells, capital expenditures and the timing thereof, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, the timing and length of plant turnarounds and the impact of such turnarounds and the timing thereof, delays resulting from or inability to complete the transaction or obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, the Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or, if any of them do so, what benefits the Company will derive there from.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), and the Company's website (www.riderres.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.

BOE Disclosure: Disclosure provided herein in respect of barrels of oil equivalent (boe) 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.

Contact Information

  • Rider Resources Ltd.
    Craig W. Stewart
    President and Chief Executive Officer
    (403) 781-2445
    Rider Resources Ltd.
    John W. Ferguson
    Vice President, Chief Financial Officer
    and Corporate Secretary
    (403) 781-2446
    Rider Resources Ltd.
    Suite 1701, 333 - 7th Ave. S.W.
    Calgary, AB T2P 2Z1
    (403) 266-0844
    Website: www.riderres.com