2010-06-21-2010-06-16

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
503MM
Description

To acquire private company with assets in southwestern Alberta.

Calgary-based E&P company Legacy Oil + Gas Inc. (Toronto: LEG) reports it will acquire privately held, Alberta-based CanEra Resources Inc. and its Albertan oil and gas assets for approximately C$503 million in cash and stock.

Legacy will pay C$241 million in cash and 20.5 million Legacy shares. The share value is based on a price of C$12.79 per Legacy share as of June 14. The acquisition includes the assumption of C$100 million in debt and includes a mutual noncompletion fee of up to C$16 million if the transaction terminates.

The assets comprise high-netback, long-life, light oil and gas properties in southwestern Alberta, including a working interest in Turner Valley Field, which contains an estimated 1.3 billion barrels of original oil in place and 1.6 trillion cubic feet of original gas in place, with associated gathering, treating and compression facilities. Legacy has identified 110 gross (86 net) development locations on Turner Valley Field.

The acquisition also provides high-impact gas-drilling opportunities on prospective long-tenure lands and access to 750 contiguous sections of prospective multi-zone oil and gas acreage in the Strathmore area in eastern Calgary.

Pro forma, Legacy will hold proved plus probable reserves of approximately 76 million barrels equivalent (81% light oil and NGL) and undeveloped acreage consisting of 418,191 net acres. The company maintains its oil and natural gas liquids weighting at more than 80% of pro forma production and more than 80% of pro forma proved plus probable reserves.

Additionally, the company expects to increase its 2010 capex by C$13 million to C$130 million and its 2010 exit production guidance to 12,700 barrels equivalent per day (83% light oil and NGL), representing a 121% increase over year-end 2009 production.

Legacy will raise C$236 million on a bought-deal basis by issuing 20 million receipts for C$11.80 each. Gross proceeds from the bought deal will be held by a third party. Financing is expected to close by July 6.

Macquarie Capital Markets Canada Ltd. and GMP Securities LP are financial advisors and National Bank Financial Inc. is strategic advisor to Legacy. TD Securities Inc., FirstEnergy Capital Corp. and BMO Capital Markets are financial advisors to CanEra.