Pendaries enters share exchange agreement with Ultra
Ultra Petroleum Corp UP
Shares issued 56,939,762 Oct 13 close $3.85
Mon 16 Oct 2000 News Release
See Pendaries Petroleum Ltd (PDQ) News Release
Mr. Philip Henry reports
Pendaries Petroleum has entered into a definitive agreement with Ultra
Petroleum Corp. pursuant to which Ultra proposes to acquire all of the
outstanding common shares of Pendaries in exchange for common shares of
Ultra. Upon completion of the transaction, Pendaries will become a wholly
owned subsidiary of Ultra and existing Pendaries shareholders will own
approximately 21 per cent of the outstanding shares of Ultra after the
transaction.
Under the agreement, Ultra will issue 1.58 shares of its common stock for
each one share of Pendaries common stock. Based on the number of Pendaries
common shares outstanding (including all outstanding in-the-money Pendaries
stock options), Ultra will issue a total of approximately 15 million shares
of its common stock to the holders of Pendaries common stock. Under the
terms of the transaction, Ultra intends to apply to be listed on the
American Stock Exchange and will continue to be listed on the Toronto Stock
Exchange after the closing. The average closing price of Ultra's shares for
the last 10 days was $2.64 (U.S.) and the average closing price of
Pendaries's shares for the last 10 days was $3.18 (U.S.).
In conjunction with this agreement, Ultra has provided a $5-million (U.S.)
line of credit to Pendaries's subsidiary, Sino-American Energy Corporation.
The line of credit will bear interest at the prime rate of Bank One, Texas
N.A. The credit facility will be fully guaranteed by Pendaries and secured
by the stock of Sino-American. Under the terms of the credit facility, any
amounts borrowed by Sino-American must be repaid by Dec. 31, 2001.
Robert E. Rigney of Pendaries will join the Ultra board of directors upon
closing of the transaction or he will be nominated on the ballot for
election at the next meeting of the Ultra shareholders. Michael D. Watford
of Ultra will continue to serve as the chairman of Ultra as well as its
president and chief executive officer.
"I believe that this is an outstanding arrangement for the shareholders of
Pendaries," said Mr. Rigney, chairman and CEO of Pendaries Petroleum. "We
anticipate that Ultra's strong cash flow combined with its revolving bank
line of credit should be sufficient to cover the capital requirements of
both Pendaries and Ultra in the future. Not only will Pendaries have its
capital requirements covered, but Pendaries's shareholders will also
participate in the upside potential of Ultra's Green River basin natural
gas play. The combined companies should immediately have positive earnings
and cash flow. In addition, Mike Watford is an extremely astute oil and gas
businessman and is just the right person to lead us into the future."
The transaction will be completed pursuant to a plan of arrangement which
must be approved by the Court of Queen's Bench of New Brunswick, Canada.
The transaction is subject to customary conditions, including the approval
of the shareholders of both Pendaries and Ultra, and is expected to close
in early 2001. A proxy circular in respect of the Pendaries shareholders
meeting is expected to be mailed to shareholders following clearance by the
United States Securities and Exchange Commission later this year. Ultra's
shareholders meeting is expected to be held in December of this year.
Ultra Petroleum is an independent natural gas exploration and production
company focused on the Green River Basin of Wyoming. Ultra is listed on the
Toronto Stock Exchange with 56,939,762 shares outstanding. Ultra has under
lease more than 200,000 net acres in and around the prolific Jonah and
Pinedale anticline areas. According to Ultra's public reports, in June of
2000, the approval of 40-acre spacing in Jonah field resulted in Ultra
adding 22 infill locations many of which are included in Ultra's current
drilling program. On the Pinedale anticline, an environmental impact
statement was finalized in late July, 2000, allowing the commencement of
full-field development over a large portion of Ultra's acreage position. At
midyear 2000, Ultra estimated its proved reserves to be 125 thousand cubic
feet, with a SEC PV-10 value of $140.7-million.
In June, 2000, Ultra initiated an 18-well drilling program in the Jonah
field. According to Ultra's public reports, as of Sept. 25, five wells of
the 18-well program were drilled, completed and producing. Two of the 18
wells had been cased, one was logging and three were drilling. Ultra
anticipates that the remaining seven wells slated for the Jonah field will
be drilled by year-end or shortly thereafter. On the Pinedale anticline,
Ultra is participating in a 10-well program. As of Sept. 25, two had been
cased and logged and were awaiting completion, one was logging, three were
drilling, and the remaining four wells were expected to be drilling in
October. According to Ultra's public reports, at Sept. 25, production had
increased to approximately 20 million cubic feet equivalent per day from 10
million cubic feet equivalent per day at June 30, 2000, and is anticipated
to increase to 40 million cubic feet equivalent per day by year-end.
Pendaries is a Houston-based independent oil and gas exploration company
with its primary focus in China. Pendaries, through its wholly owned
subsidiary, Sino-American, owns an interest in two major offshore blocks in
the Bohai Bay, China. The blocks cover approximately 766,000 acres and
contain numerous 2-D seismically identified prospects. To date, three major
fields have been discovered: the CFD 2-1, the CFD 11-1 and the CFD 12-1.
Three-dimensional seismic has been shot over the CFD 2-1 field and is
currently being shot over a large area which covers both the CFD 11-1 and
the CFD 12-1 fields, as well as nine other prospects in the area. After the
3-D seismic data is analyzed, the company and its partners plan a vigorous
drilling program in 2001. |
