HEGCO KICKS ASS
Kicking Horse Resources And Hegco Canada Signing Of Letter
11/20/01
KICKING HORSE RESOURCES LTD ("KHL-V") HEGCO CANADA INC ("HEG-V;HEGCF-0") - Kicking Horse Resources And Hegco Canada Signing Of Letter - Of Intent
Kicking Horse Resources Ltd. ("Kicking Horse") and Hegco Canada Inc. ("Hegco") jointly announce that they have signed a letter of intent whereby Kicking Horse would purchase all of the issued and outstanding shares of Hegco.
The agreement contemplates that following the completion of due diligence by both companies, Kicking Horse will make a formal take-over bid to Hegco shareholders under which Kicking Horse would acquire Hegco shares by issuing Kicking Horse shares. The share exchange ratio will be calculated based on the relative net asset values of each company as of December 1, 2001. Independent reserve reports for both companies have been commissioned and are expected to be completed within the next 40 days. The companies will jointly engage an independent financial advisor to render an opinion as to the fairness of the Kicking Horse offer. It is expected that on or before December 31, 2001, certain Hegco shareholders will enter into lock-up agreements concurrent with the execution of a pre-acquisition agreement by Kicking Horse and Hegco. Closing of the transaction is anticipated to occur on or before February 28, 2002.
Kicking Horse's management team will be responsible for the operation of the combined companies. Some Hegco management will remain involved with the operation of the U.S. assets.
Hegco Chairman Michael Sullivan believes that the transaction will be positive for Hegco shareholders; "This transaction will allow for expedited development of our undeveloped reserves and will create an entity with sufficient critical mass to attract a broader institutional investor base."
Kicking Horse Chairman David Murray stated: "The addition of Hegco's taxable Canadian assets will accelerate utilization of the tax pool base that Kicking Horse has accumulated, benefiting both shareholder groups. The Alberta natural gas assets will also augment Kicking Horse's existing core assets in Central Alberta."
Hegco is a public oil and gas company trading under the symbol "HEG" on the Canadian Venture Exchange. The company has high working interest assets with significant land bases in Alberta and Oklahoma and is producing approximately 7.8 million cubic feet of natural gas per day and 320 barrels per day of oil and natural gas liquids for a total of 1,100 boe per day (10:1). 70% of the Hegco production is located in Central Alberta.
Kicking Horse is a public oil and gas company trading under the stock symbol "KHL" on the Canadian Venture Exchange. The company presently produces approximately 375 barrels of crude oil and natural gas liquids per day and 5.75 million cubic feet of natural gas per day, for a total of 950 boe per day (10:1). Following the closing of the acquisition of the Leduc assets from the receiver-manager of Probe Exploration Inc., scheduled to be completed on or before November 29, 2001, and concurrent resale of a 10% interest in the property, the company's production is expected to be in excess of 4,700 boe per day (10:1).
Production of the combined entity is expected to be in excess of 5,800 boe per day (10:1). Kicking Horse expects that it will make a listing application to a more senior stock exchange in connection with this transaction.
The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. TEL: (403) 264-4073
Mr. W.T. David Murray, Chair3340
Hegco Canada Inc. |
