Equal To Sell Alberta Properties
Sale of its interests in the Halkirk, Wainwright, Alliance and Clair areas of Alberta to an undisclosed buyer for $17.4 million.
Equal Energy Ltd. (NYSE: EQU) plans to sell several its interests in the Halkirk, Wainwright, Alliance and Clair areas of Alberta to an undisclosed buyer for $17.4 million.
The sale is the second step in Equal’s ongoing strategic review process. Equal's management and Special Committee of the Board of Directors continue to review opportunities with the company's portfolio which now consists primarily of the Cardium oil play in the Lochend area of Alberta, certain royalty interests in Canada and the liquids rich natural gas asset in Central Oklahoma.
Equal’s management has determined that these properties it plans to sell provide the least attractive future returns among its portfolio of properties. Drilling prospects on these properties cannot economically compete for capital that is limited annually to cash flow.
The sale is expected to close on Oct. 12 and has an effective date of July 1.
The sale also includes substantially all of Equal's non-producing, suspended and abandoned wells in Alberta, Saskatchewan and British Columbia, such that Equal's remaining decommissioning liabilities will be reduced significantly. Equal estimates that its overall decommissioning provision on its balance sheet will drop by approximately two thirds when the sale closes.
The assets sold have current production of approximately 745 barrels of oil equivalent (BOE) per day, consisting of 85% medium and light oil with estimated annualized operating cash flow of $7.8 million based on the first six months of 2012.
Adjusting for this sale and the previously announced sale of Northern Oklahoma, Equal's current corporate production is approximately 8,300 BOE per day consisting of 48% natural gas, 45% NGL's and 7% oil. Equal will use the proceeds of the sale to reduce amounts outstanding on its credit facility to approximately $53 million and total debt including its convertible debentures to approximately $98 million.
Equal, based Calgary, Alberta, Canada, has U.S. headquarters in Oklahoma City, Okla. The portfolio of oil and gas properties is geographically diversified with producing properties located in Alberta and Oklahoma. Equal has compiled a multi-year drilling inventory for its properties including its oil opportunity in the Lochend Cardium play of Alberta in addition to its extensive inventory of drilling locations in the Hunton liquids-rich, natural gas play in Oklahoma.