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Equal Energy Ltd. Message Board

  • dormie18 dormie18 Nov 5, 2012 10:42 AM Flag

    Note today from Casimir Capital--thank you Nawar

    "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
    by November

    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
    asset focus

    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)."