MERGERS-ACQUISITIONS / Draig Energy to Make Offer for
Kensington Energy
ASE SYMBOL: DRA
MAY 20, 1998
CALGARY, ALBERTA--Draig Energy Ltd. (ASE:DRA) announced today that
it intends to make an offer for all Class A shares and Class B
shares of Kensington Energy Ltd ("Kensington"). Kensington
shareholders will have the option of receiving $0.70 or 0.4667
common shares of Draig Energy Ltd. for each Class A share of
Kensington and $1.40 or 0.9333 common shares of Draig for each
Class B share of Kensington subject to aggregate limits of
$2,000,000 and 1,700,000 common shares of Draig for the Class A
shares and $1,000,000 and 1,200,000 common shares of Draig for the
Class B shares. Details of the offer, which is conditional upon,
among other things, a minimum of 66 2/3 percent of each class of
the Kensington shares being tendered and the nonconversion of the
Class B shares, are expected to be mailed to Kensington
shareholders on or about June 2, 1998.
The offer price represents premiums of approximately 37 percent
and 87 percent over the 10 day weighted average closing price of
the Class A and Class B shares respectively.
Draig intends to acquire all the Class A and Class B shares of
Kensington and combine the operations of Draig and Kensington.
The combined company will continue to trade on the ASE under the
symbol "DRA".
"Draig and Kensington are working interest owners in the Giroux
Viking "F" Pool owning 6 percent and 40 percent respectively.
Water flooding of the reservoir will commence upon completing
unitization and this is expected to enhance production." says Les
Treitz, President and CEO of Draig. "The combination of
Kensington and Draig will result in a company with a larger asset
base and with increased financial capability to compete more
effectively in the oil and gas industry in Canada. The combined
company should have improved market liquidity resulting from the
increased capitalization and larger public float of the combined
entity. Draig has had access only to Kensington's public
information and estimates that on a consolidated basis, Draig will
have proven plus 1/2 probable reserves of approximately 4.26
million barrels of oil equivalent. The combined company will
have an undeveloped land base in excess of 74,000 net acres of
undeveloped land."
Draig has retained Peters & Co. Limited as its financial advisors
for this transaction.
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