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Vero Energy Announces Strategic Transaction to Create a Well Capitalized Cardium Light Oil Focused Growth Company CALGARY, ALBERTA--(Marketwire - January 3, 2012)
Vero Energy Inc. (TSX:VRO) ("Vero" or the
"Company") announced today that it has entered into
an asset purchase and sale agreement (the
"Agreement") for the divestiture of certain natural
gas assets (the "Disposition Assets") of the Company to
a private oil and gas company (the "Purchaser") for
gross proceeds of $209 million, subject to closing
adjustments (the "Transaction"). Closing of the
Transaction is anticipated to occur on or about January 31,
2012 and is subject to customary conditions for an asset
divestiture of this nature.
The Disposition Assets are primarily focused in the deep
basin region of West Central Alberta and include related
facilities but excludes zones from surface to base Cardium,
which represent estimated average daily production of 7,296
boe/d (86% Natural Gas) during the fourth quarter of 2011 and
26.5 mmboe of proved plus probable reserves at December 31,
2010.
"Through an extremely volatile political, regulatory and commodity price period the Vero team has grown production in the Company 844% and 260% on a per share basis during the past six years primarily through the drill bit," said Doug Bartole President and CEO, "the team is very excited about this transaction as it allows for all shareholders to be involved in a focused, well capitalized and debt free
growth oriented junior exploration Company in a pure light
oil play producing top quartile operating netbacks. The
Company will have a solid land base and a high quality
drilling inventory of 4-5 years with recent results of the
latest wells drilled having IP30 production rates of over 350
boe/d. This transaction puts us back to a size where in our
initial two years we provided drill bit production growth
of
over 380% and 200% on a per share basis."
From the date of the Agreement until closing of the
Transaction, Vero has agreed not to solicit or initiate
discussions regarding any other business combination or sale
of material assets and has granted the purchaser the right to
match any superior proposals. The Agreement provides for a
$15 million non- completion fee payable to the Purchaser in
certain circumstances if the Transaction is not completed and
a
$10 million deposit to be retained by Vero in certain
circumstances if the Transaction is not completed.
A portion of the cash proceeds from the Transaction are
expected to be distributed to Vero shareholders, with the
balance being utilized to eliminate Vero's current bank
indebtedness. It is anticipated that Vero will convene a
meeting (the "Meeting") of Vero shareholders in the
next 60 days to approve the proposed cash distribution,
representing approximately $0.30 per outstanding Vero share
on a non-diluted basis. The exact amount of the cash
distribution and the date for determining the Vero
shareholders of record who will be entitled to the
distribution will be confirmed at a later date.
Despite continued operational success, and significant production and reserves per share growth since inception of Vero, deterioration of North American natural gas fundamentals and stock market volatility has placed significant pressure on Vero to grow. As a result, Vero