Voyager Buys Emerald
Purchase of Rocky Mountain acreage held by Emerald Oil.
oyager Oil & Gas Inc (NYSE MKT: VOG) will buy a Emerald Oil Inc in an effort to focus on select oil and gas basins in the Rocky Mountain region in an all-stock transaction.
Under the terms of the securities purchase agreement, at closing and subject to certain adjustments, Voyager will acquire 100% of Emerald Oil's outstanding equity interests in exchange for up to 19.9% of Voyager common stock (approximately 11.6 million shares) and assume approximately USD 19.0 million of Emerald Oil's outstanding debt. Upon closing, Voyager's existing shareholders will own approximately 80% of the combined company with Emerald owning the remaining 20%. The common stock to be issued by Voyager to Emerald Australia is not being registered under federal or state securities laws.
The transaction is expected to close by the end of July 2012.
Emerald Oil Inc is a wholly-owned subsidiary of Emerald Oil & Gas NL (ASX: EMR), which will combine its oil-producing assets in the Williston Basin, specifically in the Bakken and Three Forks plays in North Dakota and Montana and with acreage in the Niobrara shae in the Sandwash Basin in Colorado and Wyoming. The combined company will operate as Emerald Oil and will be headquartered in Denver, Colorado, with important lease acquisitions underway which focus on the Williston Basin.
The transaction will significantly expand the acreage position of both companies in the Williston Basin. The combination is intended to create an oil and gas company with operating capabilities that has the ability to effectively manage a multi-rig drilling program in the Rocky Mountains and extract maximum value from both of its operated and non-operated drilling programs.
The transaction will also realign individual management responsibilities of the combined company's executives in order to allow each executive to focus on his core
area of professional expertise. The combined company will begin the transition from a non-operating business model to an operating business model with its first
operated well in Dunn County, North Dakota, which is planned to spud in early 2013 and will be followed by a continuous single-rig drilling program in 2013. The
combined company intends to leverage its extensive technical Williston Basin well database to optimize the designs of future wells.
"The untapped oil and gas reserves in the Western United States have reshaped the North American energy markets," says McAndrew Rudisill, president of Emerald
Oil. "The combination of Voyager and Emerald Oil underscores our commitment to developing an operated U.S. shale oil company. Today's announcement accelerates
our strategy of using our position in the Williston Basin to create a company focused on Bakken and Three Forks development, two of the most prolific and extensive
shale oil plays in the U.S."
J.R. Reger, Voyager's chief executive, will serve as executive chairman of the combined company. Mike Krzus, currently director and chief executive of Emerald Oil, will
serve as a director and as chief executive of the combined company.
The combined company will hold approximately 43,500 net acres in the Williston Basin. Hunt Oil, Marathon Oil, Slawson Exploration, Whiting Petroleum, Continental
Resources and Occidental Petroleum are the most active direct offset operators near the company's operated position in Dunn County. In the non-operated position,
StatOil, Oasis Petroleum, Continental Resources, Denbury Resources, Slawson Exploration, Whiting Petroleum, Newfield Exploration, Hess Corporation and EOG Resources, among many others, are all major operators.
The combined company has about 6,900 net acres operated in Dunn County, North Dakota and about 6,800 net acres of non operated assets in core focus areas. In addition, it has about 29,800 non-operated net acres, the majority of which is in Williams, McKenzie, Dunn and Montrail counties in North Dakota and Richland County, Montana.
The combined company will also hold 45,000 net acres in the Sandwash Basin Niobrara shale oil play in Moffat and Routt Counties, Colorado and Carbon County, Wyoming, which is being drilled and developed by offset operators such as Shell Oil, Quicksilver Resources and Gulfport Energy. Its non-operated assets in the Sandwash Basin include 45,000 net acres, with Emerald Oil under its joint venture agreements.
In addition, the combined company will hold approximately 33,500 net acres prospective for Heath shale oil in Musselshell, Petroleum, Garfield and Fergus Counties, Montana. Cirque Resources, Fidelity Exploration and Production, Central Montana Resources, Endeavour International and True Oil are the most active offset operators in the Heath.
The combined company will hold approximately 74,700 net operated acres prospective for the Tiger Ridge gas play in Blaine, Hill and Chouteau Counties, Montana. Devon Energy is the most active offset operator in the Tiger Ridge gas play.
In connection with the closing of the acquisition of Emerald Oil, five of the members of Voyager's Board of Directors will resign, and their vacancies will be filled with directors who have extensive knowledge and industry expertise.
Following the closing of the transaction, the parties anticipate replacing Voyager's ticker symbol on NYSE MKT with "EO." Emerald Australia will continue to be listed on the ASX under the ticker symbol "EMR."
Canaccord Genuity acted as financial advisor to Voyager, and Mayer Brown LLP acted as legal counsel.
Johnson Rice & Company LLC acted as financial advisor to Emerald Oil, and Messner Reeves, LLC acted as legal counsel.