Welcome!

News Feed Item

Waldron Energy Corporation Announces Sale of Gross Overriding Royalty for Total Proceeds of Seven Million Dollars

CALGARY, ALBERTA -- (Marketwired) -- 06/10/14 -- Waldron Energy Corporation (TSX:WDN) ("Waldron" or the "Corporation") is pleased to announce that it has entered into a purchase and sale agreement ("Agreement" or "Transaction") with Maple Leaf 2013 Oil & Gas Income Limited Partnership for total proceeds of $7 million to sell a 3% gross overriding royalty ("GORR") on its existing land base. The Agreement is subject to customary closing conditions and consents and is expected to close within two weeks. The effective date is June 10, 2014.

Transaction is Accretive to Waldron Shareholders

The Transaction crystallizes accretive value for the Corporation's shareholders and provides an immediate improvement to the balance sheet, as the proceeds from the sale of the GORR will be used to reduce total corporate indebtedness. The metrics of the deal are:

--  Based on the Corporation's December 31, 2013 GLJ Reserve Report, the
    transaction is valued at approximately Proved plus Probable at a 10%
    discount rate; and 
--  Based on annualized Q1 2014 revenue of $29.2 million, representing an
    annual GORR payment of $0.9 million, proceeds of the GORR sale represent
    an annual cash flow multiple of approximately 8.0X. 

The tables below summarize the implied valuation of the Corporation using the metrics of the Transaction, demonstrating the significant discount at which the Corporation currently trades:

                                                                            
----------------------------------------------------------------------------
Net Asset Value based on Transaction reserves valuation                     
----------------------------------------------------------------------------
Proved plus Probable NI 51-101 discounted at 10% at                         
 December 31, 2013 (2P Value)                               $     86,035,000
Approximate reduction to reserve value at December 31, 2013                 
 as a result of Transaction (2P Value)                           (6,500,000)
Net Debt at March 31, 2014 less proceeds from Transaction       (23,640,000)
----------------------------------------------------------------------------
Net Asset Value                                             $     55,895,000
Basic Common Shares Outstanding at May 31, 2014                   57,267,170
----------------------------------------------------------------------------
Net Asset Value - Basic (per share)(1)                      $           0.98
----------------------------------------------------------------------------
Current share price                                         $           0.29
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net Asset Value based on Transaction cash flow multiple                     
----------------------------------------------------------------------------
Proceeds from Transaction                                   $      7,000,000
Approximate increase to annual royalty expense as a result                  
 of Transaction                                                      870,000
----------------------------------------------------------------------------
Cash flow multiple from Transaction                                     8.0X
----------------------------------------------------------------------------
                                                                            
Q1 2014 annualized funds from operations ("funds flow")     $      8,940,000
Approximate reduction to funds flow as a result of                          
 Transaction (increased royalty expense)                           (870,000)
Approximate increase to funds flow as a result of                           
 Transaction (decreased interest expense)                            385,000
----------------------------------------------------------------------------
Revised Q1 2014 annualized funds from operations                   8,455,000
Cash flow multiple from Transaction                                     8.0X
----------------------------------------------------------------------------
Value of Corporation based on cash flow multiple from                       
 Transaction                                                $     67,640,000
Net Debt at March 31, 2014 less proceeds from Transaction       (23,640,000)
----------------------------------------------------------------------------
Net Asset Value                                             $     44,000,000
Basic Common Shares Outstanding at May 31, 2014                   57,267,170
----------------------------------------------------------------------------
Net Asset Value - Basic (per share)(1)                      $           0.77
----------------------------------------------------------------------------
Current share price                                         $           0.29
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Notes:

(1) Excludes the value of undeveloped lands and certain seismic data and does not incorporate changes in dilutives.

Transaction Highlights

--  3% GORR on all existing lands; 
--  Additional 7% GORR on two Ferrybank Falher wells yet to be drilled; 
--  If the Corporation fails to drill either of the two Ferrybank Falher
    horizontal wells, or a mutually agreed upon substitute, the Corporation
    will forfeit $750,000 per well of the $7 million advanced; and 
--  The Corporation has an option to purchase the GORR back for 15 months
    from the Agreement date at a price of 30% above the original proceeds on
    the Transaction less any royalties paid under the Agreement and less two
    thirds of any amounts forfeited as a result of any failure to drill the
    Ferrybank wells. 

Operations Update

Waldron has licensed a high impact liquids-rich natural gas Ferrybank Falher well, and is in the process of licensing a second location, and will drill the first well early in the third quarter of 2014. This well will offset a recent third-party drill which averaged over 3 mmcf per day of natural gas plus liquids over its first four months of initial production. If successful, the Corporation has multiple follow-up horizontal locations on adjacent 100% Waldron owned lands. The Corporation currently has no reserves booked to this opportunity.

Investor Information

Waldron is a Calgary, Alberta based corporation engaged in the exploration, development and production of petroleum and natural gas. The Corporation's common shares are currently listed on the Toronto Stock Exchange under the trading symbol "WDN." Additional information regarding Waldron is available under the Corporation's profile at www.sedar.com or at the Corporation's website, www.waldronenergy.ca.

About Maple Leaf

Maple Leaf Energy Income Limited Partnerships provide Canadian resident investors with energy sector investments. - See more at: http://www.mapleleaffunds.ca/EnergyIncome

Forward-Looking and Cautionary Statements

This news release contains forward-looking statements relating to the Corporation's plans and other aspects of the Corporation's anticipated future operations, strategies, financial and operating results and business opportunities. These forward-looking statements may include opinions, assumptions, estimates, management's assessment of value, reserves, future plans and operations.

Forward-looking statements typically use words such as "will," "anticipate," "believe," "estimate," "expect," "intend," "may," "project," "should," "plan," and similar expressions suggesting future outcomes, and include statements that actions, events or conditions "may," "would," "could," or "will" be taken or occur in the future. Specifically, this press release contains forward-looking statements relating to the timing and closing of the Transaction; use of proceeds; results and timing of operations, including with regards to wells expected to be drilled; whether or not recent industry results are favorable; whether or not additional well licenses are obtained and additional reserves are recognized; whether or not the Corporation achieves guidance; the character and nature of the Corporation's asset base; whether or not the asset base is prospective; and number of horizontal drilling locations and opportunities and number of follow-up opportunities. The forward-looking statements are based on various assumptions including expectations regarding the timing and success of current or future drill wells; the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures and net proceeds of the Transaction; estimates of future production; assumptions concerning the timing of regulatory approvals; the state of the economy and the exploration and production business; results of operations; business prospects and opportunities; future exchange and interest rates; assumptions with regards to hedging activities; the Corporation's ability to obtain equipment in a timely manner to carry out development activities; and the ability of the Corporation to access capital and credit. While the Corporation considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements are subject to a wide range of assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodities prices; currency fluctuations; imprecision of reserves estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; general economic conditions; delays resulting from or inability to obtain required regulatory approvals; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Waldron believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not rely unduly on forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by applicable law, Waldron does not undertake any obligation to publicly update or revise any forward-looking statements.

Note Regarding Non-GAAP Measures

Funds from operations, operating netback and net debt are not recognized measures under IFRS as issued by the International Accounting Standards Board ("IASB"). Management believes that in addition to cash flow from operations and net earnings, funds from operations and operating netback are useful supplemental measures as they demonstrate the Corporation's ability to generate the cash necessary to fund future growth through capital investment or repay debt if incurred in future periods. The Company uses net debt (bank debt plus negative working capital or less positive working capital, both excluding bank debt) as an alternative measure of outstanding debt and is used as a measure to assess the Company's financial position. Investors are cautioned, however, that these measures should not be construed as an alternative to cash flow from operating activities or net earnings determined in accordance with IFRS as an indication of the Corporation's performance or financial position. The Corporation's method of calculating these measures may differ from other entities and, accordingly, they may not be comparable to measures used by other entities. For these purposes, the Corporation defines funds from operations as cash flow from operations before changes in non-cash operating working capital, transaction and other costs and decommissioning expenditures and defines operating netback as revenue, net of any realized gains or losses on commodity price contracts, less royalties, operating and transportation expenses. Net debt is defined as current assets less current liabilities, excluding commodity price contracts.

Note Regarding BOEs

The term barrel of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.

Contacts:
Waldron Energy Corporation
Ernie Sapieha
President & CEO
[email protected]

Waldron Energy Corporation
Jeff Kearl
VP Finance & CFO
[email protected]

Waldron Energy Corporation
Murray Stodalka
Chief Operating Officer
[email protected]
www.waldronenergy.ca

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Enterprise architects are increasingly adopting multi-cloud strategies as they seek to utilize existing data center assets, leverage the advantages of cloud computing and avoid cloud vendor lock-in. This requires a globally aware traffic management strategy that can monitor infrastructure health across data centers and end-user experience globally, while responding to control changes and system specification at the speed of today’s DevOps teams. In his session at 20th Cloud Expo, Josh Gray, Chie...
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Transformation Abstract Encryption and privacy in the cloud is a daunting yet essential task for both security practitioners and application developers, especially as applications continue moving to the cloud at an exponential rate. What are some best practices and processes for enterprises to follow that balance both security and ease of use requirements? What technologies are available to empower enterprises with code, data and key protection from cloud providers, system administrators, inside...
"Calligo is a cloud service provider with data privacy at the heart of what we do. We are a typical Infrastructure as a Service cloud provider but it's been designed around data privacy," explained Julian Box, CEO and co-founder of Calligo, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
We are seeing a major migration of enterprises applications to the cloud. As cloud and business use of real time applications accelerate, legacy networks are no longer able to architecturally support cloud adoption and deliver the performance and security required by highly distributed enterprises. These outdated solutions have become more costly and complicated to implement, install, manage, and maintain.SD-WAN offers unlimited capabilities for accessing the benefits of the cloud and Internet. ...
Discussions of cloud computing have evolved in recent years from a focus on specific types of cloud, to a world of hybrid cloud, and to a world dominated by the APIs that make today's multi-cloud environments and hybrid clouds possible. In this Power Panel at 17th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the importance of customers being able to use the specific technologies they need, through environments and ecosystems that expose their APIs to make true ...
Containers and Kubernetes allow for code portability across on-premise VMs, bare metal, or multiple cloud provider environments. Yet, despite this portability promise, developers may include configuration and application definitions that constrain or even eliminate application portability. In this session we'll describe best practices for "configuration as code" in a Kubernetes environment. We will demonstrate how a properly constructed containerized app can be deployed to both Amazon and Azure ...
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
DXWorldEXPO LLC announced today that "IoT Now" was named media sponsor of CloudEXPO | DXWorldEXPO 2018 New York, which will take place on November 11-13, 2018 in New York City, NY. IoT Now explores the evolving opportunities and challenges facing CSPs, and it passes on some lessons learned from those who have taken the first steps in next-gen IoT services.
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
In this presentation, you will learn first hand what works and what doesn't while architecting and deploying OpenStack. Some of the topics will include:- best practices for creating repeatable deployments of OpenStack- multi-site considerations- how to customize OpenStack to integrate with your existing systems and security best practices.
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and G...
"DevOps is set to be one of the most profound disruptions to hit IT in decades," said Andi Mann. "It is a natural extension of cloud computing, and I have seen both firsthand and in independent research the fantastic results DevOps delivers. So I am excited to help the great team at @DevOpsSUMMIT and CloudEXPO tell the world how they can leverage this emerging disruptive trend."
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...