Chinook Energy Announces Strategic Canadian Asset Acquisition and New Credit Facility
CALGARY, ALBERTA-(Marketwire - Dec. 17, 2012) - Chinook Energy Inc. (TSX:CKE) (“Chinook” or the “Company”) is pleased to announce the following developments:
Effective April 1, 2012, Chinook acquired certain assets in the greater Grande Prairie area of northwestern Alberta from a senior producer for $31 million, before closing adjustments and related costs (the “Acquisition“). The acquired assets are within Chinook’s core Grande Prairie operating area and expand the Company’s Dunvegan and Doe Creek oil focus.
Key attributes of the Acquisition are as follows:
- Approximately 17 net sections of land;
- Average 82% operated working interest in an established Dunvegan oil pool at Elmworth;
- Average 75% operated working interest in an established Dunvegan oil pool at Knopcik;
- Approximately 80% working interest in 10 additional sections of undeveloped land and royalties in the Sinclair area;
- Average production of 290 boe/d since April 1, 2012, with 60% being from oil and liquids;
- Approximately 1.52 MMboe of proved reserves and 2.21 MMboe of proved plus probable reserves based on an independent reserves evaluation prepared by McDaniel & Associates Consultants Ltd. effective July 1, 2012;
- 10 year proved developed producing reserve life index and 18 year proved plus probable reserve life index;
- Over 30 additional horizontal locations identified; and
- Significant waterflood upside.
New Credit Facility
Chinook is also pleased to announce that it has entered into new a credit facility with a syndicate of financial institutions to provide for a $115 million revolving credit facility that will consist of a $100 million syndicated credit facility and a $15 million operating facility. This new credit facility, led by National Bank of Canada with syndicated members ATB Financial and HSBC Bank Canada, replaces the Company’s existing syndicated credit facility and is secured by Chinook’s Canadian oil and gas assets.
Chinook is also actively pursuing the establishment of a credit facility secured by its Tunisian assets to support the continued expansion of its international business.
About Chinook Energy Inc.
Chinook is a Calgary-based public oil and gas exploration and development company that combines multi-zone conventional production with resource plays in Western Canada with an exciting high growth oil business onshore and offshore Tunisia in North Africa.
In the interest of providing shareholders and potential investors with information regarding Chinook, including management’s assessment of the future plans and operations of Chinook, certain statements contained in this news release constitute forward-looking statements or information (collectively “forward-looking statements”) within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as “anticipate”, “continue”, “estimate”, “expect”, “forecast”, “may”, “will”, “project”, “could”, “plan”, “intend”, “should”, “believe”, “outlook”, “potential”, “target” and similar words suggesting future events or future performance. In addition, statements relating to “reserves” contained herein are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be economically produced in the future. In particular, this news release contains, without limitation, forward-looking statements pertaining to expectations of management regarding the Acquisition, including synergies resulting from the Acquisition and the effect of the Acquisition on Chinook.
With respect to the forward-looking statements contained in this news release, Chinook has made assumptions regarding, among other things: the ability of Chinook to execute and realize on the anticipated benefits of the Acquisition. Although Chinook believes that the expectations reflected in the forward-looking statements contained in this news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that predictions, forecasts, projections and other forward-looking statements will not occur, which may cause Chinook’s actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, without limitation, incorrect assessment of the value of the Acquisition to Chinook; failure to realize the anticipated benefits and synergies of the Acquisition; volatility in market prices for oil and natural gas; and the general economic conditions in Canada, the United States of America and globally. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the forgoing list of factors is not exhaustive. Additional information on these and other factors that could affect Chinook’s operations and financial results are included in Chinook’s Annual Information Form dated March 23, 2012 and other reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at Chinook’s website (www.chinookenergyinc.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Chinook does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Barrels of Oil Equivalent
Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl (barrel) 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 of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Reserve Life Index
The reader is also cautioned that this news release contains the term reserve life index (“RLI”), which is not a recognized measure under GAAP. Management believes that this measure is a useful supplemental measure of the length of time the reserves would be produced over at the rate used in the calculation. Readers are cautioned, however, that this measure should not be construed as an alternative to other terms such as net income determined in accordance with GAAP as a measure of performance. Chinook’s method of calculating this measure may differ from other companies, and accordingly, they may not be comparable to measures used by other companies.