Kastel any comment on this release? You follow the Rty Trs
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Isopatch
<PrimeWest to Acquire Producing Assets in Southeastern
Alberta.
Tuesday January 27, 8:38 am ET
CALGARY, Jan. 27 /PRNewswire-FirstCall/ - (TSX: PWI.UN; PWX; NYSE: PWI) - PrimeWest Energy Trust today announces that its subsidiary PrimeWest Gas Corp. ("PrimeWest") has entered into an agreement (the "Agreement") to acquire all of the outstanding shares of Seventh Energy Ltd. ("Seventh"), a publicly traded company with natural gas and crude oil production focused primarily in Southeastern Alberta, for total consideration of CDN$34.6 million cash plus assumed debt and working capital adjustments. The cost of the assumption of debt and working capital adjustments is expected to be approximately CDN$8.7 million. The acquisition is expected to close no later than March 18th, 2004 and is subject to regulatory and other conditions, which are typical of transactions of this nature.
The Agreement has the unanimous approval of the Board of Directors of both PrimeWest and Seventh, and includes lock-up agreements from all of the officers and directors of Seventh, representing approximately 23% of the outstanding shares of Seventh on a fully diluted basis. Documentation regarding the transaction will be mailed to Seventh shareholders of record as quickly as possible, subject to clarification of certain regulatory requirements. A break fee is contained in the agreement, which would be payable under certain circumstances if the acquisition does not close.
The assets of Seventh being acquired are predominantly comprised of natural gas adjacent to PrimeWest's existing assets in the Princess, Hays and Taber areas and currently produce 1300 BOE per day, of which 72% is natural gas and 28% is crude oil and natural gas liquids. In order to protect the transaction economics, PrimeWest has hedged approximately 70% of the gas production at a price of CDN$6.18 per thousand cubic feet for one year.
A total of 3.1 MMBOE of proven plus probable reserves are being acquired, based upon independent engineering estimates using the methodology prescribed in National Instrument 51-101. The acquisition includes approximately 39,000 net acres of undeveloped land, and a proprietary 3-D seismic inventory, both of which will provide enhanced future development opportunities for PrimeWest.
In the near-term PrimeWest will be investing approximately CDN$7 million in drilling, facilities, and waterflood opportunities that will significantly enhance both the production volumes and reserve recovery from the acquired assets. PrimeWest expects the acquisition to be accretive to its unitholders during 2004 on both a cashflow and net asset value per unit basis. Both the acquisition and subsequent development costs will be funded through PrimeWest's existing debt facility.
PrimeWest is a Calgary-based conventional oil and gas royalty trust that actively acquires, develops, produces, and sells natural gas, crude oil, and natural gas liquids for the generation of monthly cash distributions to unitholders. Trust units of PrimeWest are traded on the Toronto Stock Exchange (TSX) under the symbol "PWI.UN" and on the New York Stock Exchange under the symbol "PWI". Exchangeable shares of PrimeWest Energy Inc. are listed on the TSX under the symbol "PWX".
Learn more about PrimeWest on our Web site, www.primewestenergy.com.>
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