Spry Energy Ltd.

June 19, 2008 15:27 ET

Spry Energy Ltd. Announces Succesful Completion of Its Takeover Bid of Calgas Exploration Ltd.

CALGARY, ALBERTA--(Marketwire - June 19, 2008) - Spry Energy Ltd. ("Spry" or the "Company") is pleased to announce that over 97% of the common shares of Calgas Exploration Ltd. ("Calgas") have been validly deposited pursuant to Spry's offer to acquire all of the outstanding common shares of Calgas (the "Offer"). Spry has exercised its statutory rights under the compulsory acquisition provisions of the Business Corporations Act (Alberta) to acquire the remaining Calgas shares that were not deposited pursuant to the Offer. Under the terms of the Offer, shareholders of Calgas received $1.34 cash for each Calgas share tendered pursuant to the Offer. The aggregate cash consideration paid to the shareholders of Calgas pursuant to the Offer was approximately $27.6 million. In addition, upon take-up of the Calgas shares Spry paid an amount of approximately $7.5 million to pay out Calgas' existing credit line.

The acquisition of Calgas will add approximately 520 boe/d of production to Spry and is expected to increase Spry's proved and probable reserves. The acquisition will also add approximately 30,000 net acres of undeveloped lands and will increase Spry's drilling inventory. Calgas will provide Spry with several new core areas in both Northwest Alberta and Southeast Saskatchewan. Many of Calgas' Southeast Saskatchewan properties are operated by Calgas and are in close proximity to Spry's existing properties. This will enable Spry to increase its presence in the region and create a significant core area with considerable growth potential for the Company.

In connection with the Spry's take-up of Calgas shares pursuant to the Offer, subscription receipts for common shares of Spry (the "Common Share Subscription Receipts") which are currently outstanding will be converted into common shares of Spry. Each Common Share Subscription Receipt will entitle the holder to receive one common share in the capital of Spry without further payment or action on the part of the holder. The Common Share Subscription Receipts were issued in connection with the Offer as part of non-brokered private placements of (i) 316,466 common shares of the Corporation issued on a "flow through" basis pursuant to the Income Tax Act (Canada) (the "Flow-Through Shares") at a price of $6.30 per Flow-Through Share for gross proceeds of approximately $2.0 million; and (ii) 3,820,085 Common Share Subscription Receipts at a price of $5.30 per Common Share Subscription Receipt for gross proceeds of approximately $20.2 million. The net proceeds from the issuance of the Flow-Through Shares and Common Share Subscription Receipts were used to finance the Offer and the remaining proceeds will be used to fund Spry's 2008 exploration program.

Following completion of this acquisition Spry is producing approximately 1,950 boe/d, has approximately 100,000 net acres of undeveloped land, and over 90 drilling locations including 30 Bakken light oil locations in Southeast Saskatchewan. Current run rate cash flow is estimated to be $32 million (annualized), net debt is $11.0 million representing approximately four months cash flow. In June 2008, the Company has drilled seven wells (5.1 net) and will commence drilling a Bakken horizontal well in the next few days.

CAUTIONARY STATEMENTS

Certain statements regarding Spry including management's assessments of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Spry's control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements.

Such factors include, but are not limited to: the impact of general economic conditions in Canada and the United States; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced; competition; the lack of availability of qualified personnel; fluctuations in commodity prices; the results of exploration and development drilling and related activities; imprecision in reserve estimates; the production and growth potential of Spry's various assets; fluctuations in foreign exchange or interest rates; the ability to access sufficient capital from internal and external sources; and obtaining required approvals of regulatory authorities.

Accordingly, Spry gives no assurance nor makes any representations or warranty that the expectations conveyed by the forward-looking statements will prove to be correct and actual results may differ materially from those anticipated in the forward looking statements. Spry undertakes no obligation to publicly update or revise any forward-looking statements.

The term "boe" may be misleading, particularly is 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.

This news release shall not constitute an offer to sell, or the solicitation of an offer to buy, securities in the United States, or any province or territory of Canada, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The securities offered will not be, and have not been, registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of that Act.

Contact Information

  • Spry Energy Ltd.
    Mr. Kenneth Bowie, P.Eng., MBA
    President and CEO
    (403) 984-6352