Take Under offer for Draig.
NAL Oil & Gas Trust -
NAL Oil makes offer to purchase Draig Energy
NAL Oil & Gas Trust NAE.UN
Shares issued 19,086,800 2000-05-26 close $8.15
Monday May 29 2000
Also Draig Energy Ltd (DRA)
Mr. Donald Driscoll reports
NAL Oil & Gas Trust (NAL) and Draig Energy Ltd. have entered into an agreement whereby NAL will offer to purchase all of the issued and outstanding common shares of Draig on the basis of 0.2375 of a NAL trust unit for each common share of Draig. The acquisition price for Draig represents an enterprise value of approximately $51.8-million, including the assumption of $26.5-million of debt net of working capital.
The boards of directors of NAL and Draig have approved the proposed transaction and the board of directors of Draig has resolved unanimously to recommend that its shareholders accept the NAL offer. Certain directors and officers of Draig, together with associates and affiliates thereof, have entered into lock-up agreements in respect of approximately 50 per cent of the outstanding Draig common shares, pursuant to which such shareholders have agreed to deposit their shares under the offer. Draig has agreed to procure lock-up agreements from the remaining directors and officers of Draig.
NAL anticipates forwarding a takeover bid circular to Draig shareholders on or before June 8, 2000. The offer is conditional on, among other things, the tendering of a minimum of 66 2/3 per cent of the Draig common shares, on a fully diluted basis. The board of directors of Draig has agreed that it will not solicit or initiate discussions or negotiations with any third party concerning any sale of any material portion of the assets of Draig, or any acquisition of or other business combination involving Draig. Draig has agreed, under certain circumstances, to pay to NAL a non-completion fee of $1.5-million and, in certain other limited circumstances, $2.5-million.
Draig's assets to be acquired are concentrated in an area east of Red Deer, Alta. The three key areas are Brent, Hanna and Provost. The reserves consist of 94 per cent of natural gas and 6 per cent of oil and NGLs. The majority of Draig's wells and facilities are operated, with an average working interest of approximately 84 per cent.
The impact of the offer is accretive to NAL's unitholders. NAL's production, particularly natural gas, will increase significantly and cash flow per unit will increase. The current production from the Draig assets is 1,700 barrels of oil equivalent per day (15 million cubic feet per day of natural gas and 200 barrels per day of oil and NGLs). Combined with NAL's current production of 5,700 boe/d (14.5 mmcf/d of natural gas and 4,250 b/d of oil and NGLs), daily production for NAL will increase 30 per cent. Considering the effective date of July 1, 2000, for the addition of the Draig assets, NAL's production for 2000 is expected to average 6,650 boe/d compared with the previous estimate of 5,800 boe/d. The oil/gas split will change to 60 per cent/40 per cent from 75 per cent/25 per cent, which is particularly attractive given the current strong fundamentals for natural gas prices.
A conference call with Don Driscoll, president and chief executive officer of NAL, and other senior NAL executives to overview this offer will occur at 9 a.m. MT; 11 a.m. ET, on Tuesday, May 30, 2000. The conference call dial-in number is 1-800-361-1028. A replay of the conference call will be available later Tuesday afternoon for one week and can be accessed by dialing 1-877-289-8525, reservation number No. 10229.
Goepel McDermid Inc. acted as financial adviser to NAL with respect to the acquisition. Griffiths McBurney & Partners acted as financial adviser to Draig and has provided a fairness opinion.
WARNING: The company relies on litigation protection for "forward-looking" statements.
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com
old url (better for printing) |
