Pace Oil & Gas Ltd. Announces Strategic Oil Weighted Asset Acquisitions and $55 Million Bought Deal Financing

« Back to News Releases

Share Email this page  |  Print page  |  Share Share this page
 

CALGARY, ALBERTA--(Marketwire - Nov. 24, 2010) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Pace Oil & Gas Ltd. ("Pace" or the "Company") (TSX:PCE) is pleased to announce strategic asset acquisitions, increases to its 2011 guidance and capital budget and a $55 million bought deal financing. 

Acquisition Summary

Pace has entered into agreements to purchase certain strategic oil weighted assets that are currently producing approximately 1,350 boe/d for total consideration of $52 million (the "Acquisitions"). The agreements are subject to standard provisions of similar property acquisitions. The Acquisitions solidify and consolidate the Company's interests in two of its core areas – Dixonville area of the Peace River arch and the Enchant area of Southern Alberta. At Dixonville the Company will acquire 100% interest in a keyhole section of its existing waterflood, consolidate additional surrounding lands and associated infrastructure. The Acquisitions will enable the Company to continue with its optimization plans for increased recovery in the Dixonville Montney "C" light oil pool. In Southern Alberta, the Company will consolidate a portion of its existing interests and increase its share of existing oil pools and have increased exposure to its Glauconitic lithic channel play. The Acquisitions will initially be funded through our existing lines of credit and are expected to close in mid-December 2010.

The Acquisitions have the following characteristics:

Total Acquisition Price $52 million
   
Current Production: 1,350 boe/d (41% oil and NGLs)
   
Production Metric $38,519 per flowing boe/d
   
Operating Netback per boe: 1 $24.85
 
1 Based on $4.00/mcf AECO, $85.00 USD WTI, $US/$CND 0.975

2011 Guidance Update

The Company will continue with, and expand on its existing capital program that is directed to its oil opportunities. The Acquisitions expand the Company's existing oil opportunity base and with increased cash flow, the Company expects to increase its 2011 capital by approximately $10 million for total expected capital of approximately $100 million. With the Acquisitions the Company has revised its production estimates and anticipated 2011 production of between 15,000 boe/d and 16,000 boe/d. Oil and NGLs are expected to average 45% of 2011 total production and the Company expects oil and liquids to make up 50% of production by the end of 2011. 

Financing

Pace is also pleased to announce it has entered into an agreement with a syndicate of underwriters, co-led by National Bank Financial Inc. and Paradigm Capital Inc. and including Cormark Securities Inc., FirstEnergy Capital Corp. and Acumen Capital Finance Partners Limited (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase for resale to the public, on a bought deal basis, 5,860,000 common shares of Pace ("Common Shares") at a price of $7.75 per Common Share for gross proceeds of $45,415,000 and 1,040,000 Common Shares, to be issued on a "flow-through" basis under the Income Tax Act (Canada) with respect to Canadian exploration expense ("Flow-Through Common Shares"), at a price of $9.70 per Flow-Through Common Share for additional gross proceeds of approximately $10,088,000 (collectively, the "Financing"). The Financing is for aggregate gross proceeds of approximately $55,503,000. In addition, the underwriters have been granted an over-allotment option, exercisable for a period of 30 days following closing of the Financing, to purchase a further 586,000 Common Shares, at a price of $7.75 per share for additional gross proceeds of $4,541,500.

The net proceeds from the Common Share financing will be used to pay down the bank debt that will be drawn to fund the Acquisitions and for general corporate purposes. The net proceeds from the Flow-Through Common Shares financing will be used to fund ongoing exploration activities eligible for Canadian exploration expenses which will be renounced in favour of the subscribers of the of the Flow-Through Common Shares effective on or before December 31, 2010. Closing of the Financing is subject to customary conditions and regulatory approvals, including the qualification for distribution of the Common Shares and Flow-Through Common Shares by way of short form prospectus in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario and the approval of the TSX, and is expected to close on or about December 16, 2010.

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

CORPORATE INFORMATION

Pace is a growth oriented, intermediate producer with a breadth of oil and gas resource opportunities focused in Alberta. Pace's common shares trade on the TSX under the symbol PCE. Pace currently has 40,027,130 shares outstanding prior to the Financing.

FORWARD-LOOKING STATEMENTS

Certain statements contained within this press release constitute forward looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements.

In particular, this press release contains the following forward looking statements pertaining to, without limitation, the following: expectations and assumptions concerning receipt of required regulatory approvals and the satisfaction of other conditions to the completion of and use of proceeds from the Financing; Pace's future production volumes; and anticipated capital expenditures. In addition, statements relating to "reserves" or "resources" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future.

With respect to the forward looking statements contained in this press release, Pace has made assumptions regarding: future commodity prices; the impact of royalty regimes and certain royalty incentives, the timing and the amount of capital expenditures; production of new and existing wells and the timing of new wells coming on stream; future operating expenses including processing and gathering fees; the performance characteristics of oil and natural gas properties; the size of oil and natural gas reserves.

We believe the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements included in, or incorporated by reference into, this press release should not be unduly relied upon. These statements speak only as of the date of this press release or as of the date specified in the documents incorporated by reference into this press release, as the case may be. The actual results could differ materially from those anticipated in these forward looking statements as a result of the risk factors set forth including: volatility in market prices for oil and natural gas; counterparty credit risk; access to capital; changes or fluctuations in production levels; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; stock market volatility and market valuation of Pace stock; geological, technical, drilling and processing problems; limitations on insurance; changes in environmental or legislation applicable to our operations, and our ability to comply with current and future environmental and other laws; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; and the other factors discussed under "Risk Factors" in our Joint Information Circular dated May 10, 2010 filed on SEDAR. Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward looking statements contained in this press release and the documents incorporated by reference herein are expressly qualified by this cautionary statement. The forward looking statements contained in this document speak only as of the date of this document and Pace does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release. Pace Oil & Gas Ltd.
Fred Woods
President & CEO
(403) 303-8505
fwoods@paceoil.ca
or
Pace Oil & Gas Ltd.
Judy Stripling
Executive Vice-President & CFO
(403) 303-8502
jstripling@paceoil.ca