CALGARY, ALBERTA, Oct. 28, 2009 (Marketwire) -- Emerge Oil & Gas Inc. ("Emerge" or the "Company") is pleased to announce that it has entered into an agreement with Provident Energy Trust (TSX-PVE.UN; NYSE-PVX) to acquire certain oil and natural gas assets located in the Company's core operating and producing area of Lloydminster around the Saskatchewan and Alberta border, and in Provost, Alberta, for a total purchase price of $87 million (the "Acquisition").
PROPERTY ACQUISITION
Production from the assets during the third quarter of 2009 was 2,200 barrels of oil equivalent per day (boe/d); approximately 1,500 boe/d of heavy oil in the Lloydminster area and 700 boe/d of light and medium oil in the Provost area. Proved plus probable (P+P) reserves were 4.4 million boe at June 30, 2009. The purchase reflects transaction metrics (without adjustment for undeveloped land and seismic) of $39,545 per flowing boe/d and $19.77 per boe of P+P reserves. FirstEnergy Capital Corp. acted as exclusive financial advisor to Emerge in connection with the Acquisition.
Tom Greschner, Chairman, President and Chief Executive Officer of Emerge said: "This asset acquisition will complement our core Lloydminster heavy oil asset base where we have achieved success and are currently producing nearly 1,800 boe/d. We are also extremely excited to add a new light and medium oil core area in the Provost/Thompson Lake area of Alberta. Emerge has added exceptional value for our shareholders and we intend to continue to increase shareholder value on accretive per-share metrics."
The acquisition has an effective date of September 1, 2009 and is subject to standard industry closing conditions. Assuming the successful closing of the Acquisition, which is expected to occur on or around November 30, 2009, Emerge will have production of approximately 4,300 boe/d (94% oil and 6% natural gas and associated liquids) and a P+P reserve base of approximately 9 million boe. Emerge plans to exit 2009 at approximately 4,800 boe/d.
The total purchase price of $87 million, before closing adjustments, consists of $70 million in cash and $17 million in common shares of Emerge. The cash portion of the acquisition will be funded by bank debt and an equity financing.
FINANCING
For the equity financing, the Company is pleased to announce that it has entered into a private placement equity financing agreement with a syndicate of underwriters led by FirstEnergy Capital Corp. (collectively, the "Underwriters"), to issue 25.0 million subscription receipts on a firm bought-deal basis ("Firm Subscription Receipts") at a price of $2.00 per Subscription Receipt for gross proceeds of $50 million.
