UPDATE: Equal Energy Soars 13% As Announces Sale of Lochend Cardium Assets; Lost 2.5% Friday

Equal Energy Ltd. (EQU.TO), which dropped 2.5% Friday, has soared 13% this morning as it announced that it has closed an agreement with another Canadian energy company whereby Equal has sold its Lochend Cardium assets for cash consideration of $62 million, effective October 1st 2012. The assets sold include current production of approximately 525 boe/d (93% light oil) based on the most recent 30 day average, related infrastructure and undeveloped land.

Equal will use the proceeds from the Lochend sale to fully repay the amount outstanding on its credit facility and estimates that it will have approximately $10 million in cash after the repayment. Net debt will total approximately $35 million including outstanding convertible debentures. In light of this disposition the company's banking syndicate is reviewing the limit on the company's credit facility. Equal estimates that the credit facility will be in the range of $110 million secured against the borrowing base of the Central Oklahoma assets.

Equal's last remaining Canadian asset is represented by a royalty stream of payments from producing wells in Western Canada. The company will continue to operate its Central Oklahoma assets consisting of approximately 7,800 boe/d of liquids rich natural gas where strong historical drilling success has been experienced. There is an established inventory of future drilling locations and a staff of experienced people in Oklahoma managing these assets. Management believes that in addition to successful drilling, there is significant additional upside from natural gas and NGL commodity price recovery.

The company is still conducting its Strategic Review process and is evaluating proposals for the sale of the remaining royalty assets which, if sold, will represent an exit from all Canadian operations. Equal's Special Committee of the Board of Directors and management are moving to the final step in the Strategic Review Process to finalize the go forward strategy for the company. A Canadian Trust, US Master Limited Partnership and an Exploration and Production Corporation are all being considered. The make-up of the Board of Directors and Executive Management team as well as an overall go forward manpower plan will follow the Company structure decision. Equal expects to conclude the Strategic Review process shortly after the conclusion of the evaluation of the royalty proposals, likely by late November 2012.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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