Waldron Energy Corporation

Waldron Energy Corporation

December 02, 2014 19:00 ET

Waldron Energy Corporation Announces Engagement of Financial Advisor to Undertake Process to Dispose of Assets in Order to Unlock Shareholder Value

CALGARY, ALBERTA--(Marketwired - Dec. 2, 2014) -

Waldron Energy Corporation (TSX:WDN) ("Waldron" or the "Corporation") is pleased to announce that it has engaged Cormark Securities Inc. as its exclusive financial advisor to assist the Corporation in order to pursue the sale of a material portion of the assets of the Corporation, either in one transaction or in a combination of transactions; a merger or other business combination; the outright sale of the Corporation; or some combination thereof. While due consideration will be given to all alternatives, the Board of Directors of the Corporation (the "Board") believes that a sale of one or a combination of assets is most likely to best enhance shareholder value.

Taking into account recent transactions, Waldron's Board has determined that the Corporation's shares trade at a significant discount to the inherent value of the Corporation's high quality oil and liquids rich natural gas properties, which are also characterized by high working interests and high operatorship. The Board believes a large reason for the trading discount is the Corporation's relative debt level. Undertaking a process to dispose of individual assets will widen the market of potential acquirers and may result in more attractive deal metrics. In this scenario, the Board believes that the sum of the parts will exceed the market value of the whole Corporation in an acquisition scenario. Accordingly, the Corporation will work with its financial advisor to prepare pertinent information in order to initiate a formal process where the Corporation will market its entire asset base in an effort to sell a portion or substantially all of its assets.

The Corporation's daily production has averaged approximately 1,650 - 1,700 boe per day during the first seven weeks of the fourth quarter of 2014 and the Corporation estimates current net debt outstanding is approximately $24.5 million. At November 30, 2014, the Corporation had approximately 62.7 million shares outstanding. The current share price represents a significant discount to the Board and management's estimate of the potential value to be realized in a disposition, taking into consideration recent transactions, the estimated cash flow generating capability of the assets and the estimated net asset value.

In consultation with its financial advisor, Waldron feels that it would be best served to open up a data room in early 2015, once the 2014 year-end reserves evaluation is available from the Corporation's third party reserve evaluator. Waldron expects to provide an update in mid to late January as to the timing of the sales process, including availability of marketing materials and access to a confidential data room and management technical presentations. Interested parties may also contact Cormark Securities at waldron@cormark.com or visit www.cormark.com (see 'Investment Banking' and 'Announced M&A Mandates') for more information and updates concerning the sale process.

The Corporation cautions that there are no assurances or guarantees that the process will result in one or more transactions or, if one or more transactions are undertaken, the terms or timing of such transaction(s). Given the current preparation of the Corporation's annual independent reserves report and the expected timing of its completion, the Corporation has not established a definitive schedule to complete its identification, examination and consideration of potential transactions.

Investor Information

Waldron is a Calgary, Alberta based corporation engaged in the exploration, development and production of petroleum and natural gas. The Corporation's common shares are currently listed on the Toronto Stock Exchange under the trading symbol "WDN."

Additional information regarding Waldron is available under the Corporation's profile at www.sedar.com or at the Corporation's website, www.waldronenergy.ca.

Forward-Looking and Cautionary Statements

This news release contains forward-looking statements relating to the Corporation's plans and other aspects of the Corporation's anticipated future operations, strategies, financial and operating results and business opportunities. These forward-looking statements may include opinions, assumptions, estimates, management's assessment of value, reserves, future plans and operations.

Forward-looking statements typically use words such as "will," "anticipate," "believe," "estimate," "expect," "intend," "may," "project," "should," "plan," and similar expressions suggesting future outcomes, and include statements that actions, events or conditions "may," "would," "could," or "will" be taken or occur in the future. Specifically, this press release contains forward-looking statements relating to the Corporation's contemplated asset sale process; and the estimated net asset value of the Corporation. The forward-looking statements are based on various assumptions including the assumptions with respect to production, implied valuation, netbacks, annualized cash flow and approximate net debt, as well as expectations regarding the timing and success of its asset sale process, the timing and success of current or future drill wells; the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures and success of the asset sales process; estimates of future production; assumptions concerning the timing of regulatory approvals; the state of the economy and the exploration and production business; results of operations; business prospects and opportunities; future exchange and interest rates; assumptions with regards to hedging activities; the Corporation's ability to obtain equipment in a timely manner to carry out development activities; and the ability of the Corporation to access capital and credit. While the Corporation considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The recovery and reserves estimates provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Waldron cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking information is subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas.

Forward-looking statements are subject to a wide range of assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodities prices; currency fluctuations; imprecision of reserves estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; general economic conditions; delays resulting from or inability to obtain required regulatory approvals; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive. Please refer to the Corporation's annual information for more information regarding the risks factors applicable to the Corporation.

Although Waldron believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not rely unduly on forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by applicable law, Waldron does not undertake any obligation to publicly update or revise any forward-looking statements.

Note Regarding Non-GAAP Measures

Net debt, annualized cash flow and the other amounts set forth in this press release are not recognized measures under IFRS The Corporation's method of calculating these measures may differ from other entities and, accordingly, they may not be comparable to measures used by other entities. Such amounts have been calculated in the manner set forth above solely for the purposes of estimating the net asset value of the Corporation and should not be used for any other purpose or as an indication of the current or future financial performance of the Corporation. Readers are encouraged to refer to the Corporation's financial statements and associated Management's Discussion & Analysis filed on SEDAR for a discussion of such matters.

Note Regarding BOEs

The term barrel of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.

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