"Lochend Unload – Divestiture of Alberta Cardium Assets Eliminates Outstanding
Bank Debt; Equal Now Focuses Solely on Liquids Rich Hunton
Equal unloads Lochend Cardium, as management looks to wrap up strategic review
Strategic dispositions continue, as Equal enters an arrangement to sell its
Cardium assets. Current production for the assets is estimated at 525 boe/d (93%
oil), with the transaction including related infrastructure and undeveloped
acreage. Equal expects to receive a cash consideration of $62mm, translating to
an impressive $7,750 per acre or $118,300 per flowing boe. The substantial
inflow of cash is expected to eliminate Equal's outstanding bank debt, leaving
the company with $10mm in cash after the payment. After accounting for
convertible debentures, Equal now shows a net debt of approximately $35mm. The
transaction is expected to be in effect as of October 1st.
The strategic review process shifts to the potential sale of the company's
royalty stream from producing Western Canadian wells. The company's structure,
including board and executive team, will also be examined during the review.
Management is expected to continue the strategic review process until late
Focusing on development of liquids-rich Hunton, with multi-year drilling
The royalty stream represents Equal's only remaining Canadian asset, placing the
company's development focus entirely on the higher liquids content gas in
Central Oklahoma. With a history of drilling success in the area, management
looks to expand the current production of 7,800 boe/d, drawing on an established
inventory of targets.
Maintaining Target of $5.50, with accretive sales metrics supporting a refined
Our target is derived by combining a 2012E Core NAV of $7.55/sh with a blended
5.0x EV/DACF on 2012 & 2013 production ($4.03/sh)."