R.Barbe - say goodbye to your CVO Caravan shares...... KCH Ketch is going to pay $2.00 for them. Nice pick at $0.75.
TSE SYMBOL: KCH
AND CARAVAN OIL & GAS LTD.
CDNX SYMBOL: CVO
OCTOBER 10, 2000 - 09:15 EDT
Ketch Energy Ltd. and Caravan Oil & Gas Ltd. Announce
Agreement for Ketch to Acquire Caravan
CALGARY, ALBERTA--Ketch Energy Ltd. ("Ketch") (TSE:KCH) and
Caravan Oil & Gas Ltd. ("Caravan") (CDNX:CVO) today jointly
announced that they have entered into an agreement whereby Ketch
will make an offer to purchase all of the issued and outstanding
common shares of Caravan on the basis of $2.00 cash or 0.59 of a
Ketch share for each Caravan share, at the election of the Caravan
shareholders, to a maximum of $17,468,100 in cash and 4,910,400
Ketch shares plus 0.59 of a Ketch share for each Caravan stock
option or warrant exercised. The $2.00 cash offer represents a 21%
premium over Caravan's closing price of $1.65 on October 6, 2000.
The board of directors of Caravan unanimously supports the Offer
and have agreed to recommend that shareholders of Caravan accept
the Offer. Certain shareholders of Caravan representing
approximately 57% of the currently outstanding common shares,
including all officers and directors of Caravan, have agreed to
irrevocably deposit their shares under the Offer. Caravan has also
agreed not to solicit or encourage any competing transaction.
Caravan has also agreed to pay Ketch a break fee of $1.07 million
in certain circumstances, and Ketch has agreed to pay Caravan a
break fee of $1.07 million in the event Ketch breaches the
agreement or fails to take up and pay for the Caravan shares upon
satisfaction of all the conditions of the Offer.
The aggregate value of the offer, including the assumption of $1.0
million in net debt and approximately $1.9 million for the buyout
of Caravan stock options, is approximately $36.6 million.
Caravan's current daily production of 1,500 barrels of oil
equivalent ("BOE"), including 4.4 mmcf/d of natural gas, implies
an acquisition cost of approximately $21,000 per flowing BOE/d
after the deduction of approximately $5.0 million in value for
62,400 acres of undeveloped land. Based on a review by Ketch and
its independent engineers of Caravan's September 2000 reserves,
the acquisition implies a cost of $10.35 per proven BOE of
reserves and a cost of $8.84 per established BOE of reserves.
"Caravan is an exceptional strategic fit for Ketch" stated Ketch
President and CEO, Grant Fagerheim. "Ketch currently operates a
joint-venture with Caravan in the Peace River Arch area of Alberta
including the Boundary Lake natural gas property. As well, Caravan
provides Ketch with additional growth opportunities from its
southern Alberta properties and a strong production and cash flow
base from which to grow. Current combined production of Ketch and
Caravan is 4,700 BOE/d."
In conjunction with the transaction, Ketch has entered into
arrangements to secure downside commodity protection. This price
protection will ensure a minimum net WTI price of US$27.00 for
1,000 bbl/day of crude oil production and a minimum net AECO
natural gas price of $5.25 per mcf for 5.0 mmcf/d for calendar
2001. "Caravan has exceptionally high quality production." said
Fagerheim. "Crude oil quality averages 38 degrees API, and
Caravan's operating costs have averaged less than $4.30 per BOE
this year. Based on the downside commodity price protection
initiatives undertaken in conjunction with this transaction, the
operating netbacks on Caravan's production in 2001 should be no
less than $28.00 per BOE, which based on our view of Caravan's
reserves, will provide for a proven reinvestment ratio on the
acquisition of greater than 2.7 times."
Ketch anticipates mailing a take-over bid circular to Caravan
shareholders shortly. The Offer is subject to all necessary
regulatory approvals and to customary conditions, including that a
minimum of 66 2/3% of the outstanding Caravan shares, calculated
on a fully diluted basis, be tendered.
FirstEnergy Capital Corp. and Newcrest Capital Inc. acted as
financial advisors to Ketch in connection with the transaction and
Goepel McDermid Inc. acted as financial advisor to Caravan.
Forward-Looking Statements
The above disclosure contains certain forward-looking statements
that involve substantial known and unknown risks and
uncertainties. These forward-looking statements are subject to
numerous risks and uncertainties, certain of which are beyond
Ketch's and Caravan's control, including: the impact of general
economic conditions in the U.S. and Canada, fluctuations in
product prices and in foreign exchange or interest rates, industry
conditions, the adoption of new environmental laws and regulations
and changes in how they are interpreted and enforced, increased
competition, the lack of availability of qualified personnel or
management, stock market volatility and market valuations of
companies with respect to the announced transactions, and the
final valuations thereof, and obtaining required approvals of
regulatory authorities. Ketch's and Caravan's actual results,
performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, of if any of them do so, what benefits, including the
amount of proceeds, that Ketch and Caravan and will derive
therefrom.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Ketch Energy Ltd.
Grant B. Fagerheim
President & C.E.O.
(403) 261-2334
or
Ketch Energy Ltd.
J. Paul Charron
Vice President & C.F.O.
(403) 261-2330
Website: www.inr-res.com
or
Caravan Oil & Gas Ltd.
Curtis W. Hicks
C.E.O.
(403) 233-9141 |
