Skope Energy Inc.
TSX : SKL

Skope Energy Inc.

December 21, 2010 21:18 ET

Skope Energy Inc. Announces Dividend and Provides an Operational Update

CALGARY, ALBERTA--(Marketwire - Dec. 21, 2010) - Skope Energy Inc. ("Skope") (TSX:SKL) is pleased to announce the following major milestones:

NOT FOR DISTRIBUTION IN THE UNITED STATES.

  • Declaration of initial quarterly dividend of $0.175/share;
  • Closing of $1.5 mm initial public offering;
  • Commencement of trading of common shares ("Common Shares") of Skope on the Toronto Stock Exchange ("TSX") under the ticker symbol "SKL" on December 21, 2010;
  • Appointment of board of directors, including a majority of independent members;
  • Appointment of Daniel G. Belot as Vice President, Finance and Chief Financial Officer;
  • Establishment of head office in Calgary, Alberta;
  • Selection of first three horizontal drilling locations, to be drilled in the first calendar quarter of 2011; and
  • Commencement of hedging program.

Initial Dividend Declared

Skope is pleased to announce that its board of directors has approved a quarterly dividend of $0.175 per share. This dividend will be paid on January 17, 2011 to shareholders of record on January 5, 2011. The ex-dividend date is December 31, 2010.

Appointment of the Board of Directors and Management

Skope is pleased to announce the appointment of the following independent directors and additions to the management team:

Dr. Edward W. Bogle, ICD.D – Director, Chair, Reserves Committee

Dr. Bogle recently retired from Nexen Inc. where he served as Chief Strategic Officer of Nexen International Petroleum (a subsidiary of Nexen Inc.) since 2005. Dr. Bogle served as Executive Vice President of Exploration of Talisman Energy from 1992 to 2003. Dr. Bogle holds an ICD.D (Certified Director) from the Institute of Corporate Directors, a Western Executive Program Diploma from the University of Western Ontario and a Ph.D. in Geological Sciences from Queen's University.

Robert B. Hodgins – Director, Chair, Audit Committee

Robert B. Hodgins retired in late 2004 from an executive role following a career that spanned more than 25 years with several senior Canadian corporations and is currently an investor and a corporate director. From 2002 to 2004, he served as the Chief Financial Officer of Pengrowth Energy Trust. Beginning in 1998 and until 2001, he was Vice President and Treasurer of Canadian Pacific Limited. Prior to that he was the Chief Financial Officer of TransCanada Pipelines Limited from 1993 to 1998 and held various other senior positions at TransCanada commencing in 1981.

Mr. Hodgins is a director of Enerplus Resources Fund, MGM Energy Corp., Altagas General Partner Inc., MEG Energy Corp., Fairborne Energy Ltd. and Orion Oil and Gas Corporation.

Mr. Hodgins holds a Bachelor of Arts in Business from the Richard Ivey School of Business and is a Chartered Accountant (Ontario and Alberta).

Shannon M. Gangl – Director and Corporate Secretary, Chair, Corporate Governance and Compensation Committee

Shannon M. Gangl is a partner with Burnet, Duckworth & Palmer LLP. She is a Director and/or Corporate Secretary of a number of public and private corporations. Ms. Gangl is a member of the Law Society of Alberta and holds a Bachelor of Commerce degree from the University of Alberta and an LLB. from the University of Victoria.

Ms. Gangl is corporate secretary of Enseco Energy Services Corp., Midway Energy Ltd. and Whitecap Resources Inc. and is also a director of Midway Energy Ltd.

Henry A. Cohen, CFA, DMS – Director, President and Chief Executive Officer

Henry A. Cohen is President and Chief Executive Officer of Full Cycle Energy Investment Management Limited ("FCEIM"), an investment asset manager he founded in 2003, focused on energy investments. He is also the Chairman, President and Chief Executive Officer of Skope. Prior to forming FCEIM, Mr. Cohen was a Canadian energy investment analyst throughout most of his career, with a focus on corporate strategies, business cycles, and technical assessments.

Mr. Cohen is an accredited Chartered Financial Analyst and Derivative Market Specialist and has a Bachelor of Commerce from McGill University.

Viren S. Wong, CPA, CFA, PRM – Director and Executive Vice-President and Chief Operating Officer

Viren S. Wong is a founding partner of FCEIM and has been in the investment industry over ten years. Prior to joining FCEIM in 2003, Mr. Wong worked as an equity research analyst at Credit Suisse First Boston.

Mr. Wong is licensed in the United States of America as a Certified Public Accountant, is an accredited Chartered Financial Analyst and Professional Risk Manager and has a Bachelor of Commerce from the University of Toronto.

Daniel G. Belot – Vice President, Finance and Chief Financial Officer

Daniel G. Belot has 25 years of experience in the oil and natural gas and financial services industries. Mr. Belot was the Vice President Finance and Chief Financial Officer of Petrodorado Energy Ltd., a Canadian public energy company from November 2009 to September 2010. Prior thereto, Mr. Belot was the Vice President Finance and Chief Financial Officer of Trafalgar Energy Ltd. as well as one of its founding partners from June 2006 to July, 2009. From September 2003 to October 2005, Mr. Belot was the Vice President Finance and CFO at Baytex Energy Trust, a Canadian oil and gas energy trust. Prior to joining Baytex, Mr. Belot spent three years as Manager, Investor Relations for Pengrowth Energy Trust.

Mr. Belot has additional relevant experience as an investment and corporate banker with Scotia Capital. Mr. Belot holds a Bachelor's degree in Economics from the University of Calgary.

Horizontal Drilling Program

Following an extensive study of recently acquired reservoirs, Skope and Spur Resources Ltd. (the operator of Skope's assets) plan to drill three horizontal wells during the first quarter of 2011. These wells will test the concept in three zones - the Bow Island, the Medicine Hat and the Second White Specks formations. The results of this program could have a material bearing on capital expenditures going forward.

Hedging Program

Skope's strategy in hedging and risk management is structured to meet the following objectives:

  • Protect CAPEX and dividends 
  • Protect borrowing base
  • Participate in commodity upside

Subsequent to September 30, 2010, Skope implemented a natural gas hedging strategy which provides a floor price on a portion of its natural gas production by purchasing put options. A put option gives the holder (in this case, Skope) the right to sell a defined volume of natural gas at a fixed price for a defined period of time thereby establishing a minimum realized sales price. In addition, Skope has sold call options on one half the volumes for which it acquired the put options, for the purpose of partially offsetting the cost of acquiring the put options. The call options are at a higher price than the put options and extend for the same period. The net effect is that Skope will receive no less than the put price on the volumes subject to the put options, but will not receive more than the call price on half of such volumes. Skope has also engaged in a costless collar contract. All of Skope's natural gas price risk contracts are summarized in the table below.

Contract Period   Floor Price Ceiling Price
Start   End   Price
– C$/GJ
  Volume
– GJ/d
  Percentage of Expected Production Price
– C$/GJ
  Volume – GJ/d   Percentage of Expected Production
December 1, 2010   December 31, 2010   3.50   4,000   14% 3.90   2,000   7%
January 1, 2011   May 31, 2011   3.58   8,000   28% 3.93   4,000   14%
June 1, 2011   October 31, 2011   3.63   6,000   21% 4.02   3,000   10%
November 1, 2011   November 30, 2011   3.75   8,000   28% 4.17   5,000   17%
December 1, 2011   March 31, 2012   4.10   2,000   7% 4.63   2,000   7%

In addition to Skope's commodity hedging contracts, Skope has fixed the interest rate on $23 mm of its outstanding debt under two separate contracts. The first contract is for $13 mm at an all-in effective interest rate of 4.97% for five years. The second contract is for $10 mm at an all-in effective interest rate of 4.41% for three years.

Skope anticipates entering into further hedging arrangements in the next few months. The final level of hedged production will depend on the results of the horizontal drilling program and levels of future capital spending.

About Skope Energy Inc.

Skope is in the business of oil and natural gas exploration, development and production in Western Canada with a focus on shallow natural gas. Skope was recently formed to acquire an 80% working interest in a package of producing shallow gas assets, located in southeast Alberta and southwest Saskatchewan.

Skope's Common Shares are listed on the TSX under the symbol "SKL".

Forward-Looking Statements

This news release contains forward-looking information that involves known and unknown risks and uncertainties, most of which are beyond the control of Skope. Specifically, forward-looking information in this press release includes, but is not limited to, the payment of dividends, the horizontal drilling program, the results of the horizontal drilling program, Skope's hedging program, the results of Skope's hedging program, expected production levels and interest rates. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information. Accordingly, prospective investors should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this release and, other than as required by applicable securities laws, Skope does not assume any obligation to update or revise them to reflect new events or circumstances. 

The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.

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