Based on Petroamerica's most recent closing price of
"This transaction provides the diversification and scale we have been searching for in
•Growth and Diversification – Significant first step towards expanding and diversifying Petroamerica's portfolio by acquiring four blocks focused in the
KEY ATTRIBUTES OF THE COMBINED COMPANY:
•Interests in nine E&P contracts focused on high netback light and medium oil exploration and production in the Llanos and Putumayo Basins in
CONFERENCE CALL AND WEBCAST INFORMATION
Petroamerica will host a conference call and webcast to discuss this transaction on
Under the terms of the Arrangement, each Suroco Shareholder will receive consideration of 1.7627 Petroamerica Shares per Suroco Share.
It is anticipated that Petroamerica will issue an aggregate of 237 million Petroamerica Shares to Suroco Shareholders in connection with the Arrangement. On closing, Petroamerica intends to repay Suroco's credit facility, of which not more than
Pursuant to the Arrangement Agreement, all of Suroco's outstanding options will be exercised in accordance with their terms, paid out in cash based on the "in-the-money" amount or otherwise terminated prior to the closing of the Arrangement. In addition, under the terms of the Arrangement Agreement, all holders of Suroco warrants and contingent value rights will be entitled to receive Petroamerica Shares, adjusted for the Exchange Ratio, in lieu of the number of Suroco Shares otherwise issuable upon the exercise thereof.
Completion of the Arrangement is subject to customary closing conditions, including requisite Suroco Shareholder, court, government and regulatory approvals. The Arrangement will need to be approved by not less than two-thirds of the votes cast by Suroco Shareholders, andby a majority of votes cast by Suroco Shareholders after excluding the votes cast byshareholders who are excluded shareholders under applicable securities requirements, in person or by proxy at the annual and special meeting (the "Suroco Meeting") of Suroco Shareholders to be held on or about
The Arrangement Agreement provides for, among other things, a non-solicitation obligation on the part of Suroco, with a customary "fiduciary out" provision that entitles Suroco to consider and accept a superior proposal, and a right in favour of Petroamerica to match any superior proposal.If the Arrangement Agreement is terminated in certain circumstances, including if Suroco enters into an agreement with respect to a superior proposal or if the board of directors of Suroco withdraws or modifies its recommendation with respect to the proposed Arrangement, Petroamerica is entitled to a termination payment in cash of
The Suroco board of directors has unanimously approved the Arrangement Agreement and, based on the verbal fairness opinion of its financial advisor, Peters &
The Petroamerica board of directors has unanimously approved the Arrangement Agreement.
Full details of the Arrangement will be included in an information circular of Suroco to be mailed to Suroco Shareholders in accordance with applicable securities laws. A copy of the aforementioned information circular and related documents will be filed under Suroco's issuer profile on SEDAR at www.sedar.com at the applicable time.
For a complete description of Suroco's assets, business and financial matters, please visit their website at www.suroco.com, and review their publicly disclosed information available on Suroco's issuer profile at www.sedar.com.
Forward Looking Statements:
This news release includes information that constitutes "forward-looking information" or "forward-looking statements". More particularly, this news release contains statements concerning expectations regarding the timing and successful completion of the Arrangement, cash flow, business strategy, priorities and plans, expected production, the evaluation of certain prospects in which Petroamerica will hold an interest following the completion of the Arrangement, estimated number of drilling locations, expected capital program (including its allocation), production growth, reserves growth, the receipt of and the timing of receipt of environmental licenses, the ability of Petroamerica to sell its crude volume and other statements, expectations, beliefs, goals, objectives assumptions and information about possible future events, conditions, results of operations or performance. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, estimates, forecasts, projections and other forward-looking statements will not occur, which may cause actual performance and 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. Business priorities disclosed herein are objectives only and their achievement cannot be guaranteed. Indicative capital estimates for 2014, which are provided herein, are subject to change.
Material risk factors include, but are not limited to: the inability to obtain regulatory approval for any operational activities, inability to get all necessary approvals for completion of the Arrangement, the risks of the oil and gas industry in general, such as operational risks in exploring for, developing and producing crude oil and natural gas, market demand and unpredictable shortages of equipment and/or labour; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; fluctuations in oil and gas prices, foreign currency exchange rates and interest rates, and reliance on industry partners and other factors, many of which are beyond the control of Petroamerica. You can find an additional discussion of those assumptions, risks and uncertainties in Petroamerica's Canadian securities filings.
Neither Petroamerica nor any of its subsidiaries nor any of its officers, directors or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor do any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments.
Readers should also note that even if the drilling program as proposed by Petroamerica is successful, there are many factors that could result in production levels being less than anticipated or targeted, including without limitation, greater than anticipated declines in existing production due to poor reservoir performance, mechanical failures or inability to access production facilities, among other factors.
Statements relating to "reserves" are deemed to be forward-looking statements or information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitable in the future. There are numerous uncertainties inherent in estimating quantities of proved reserves, including many factors beyond the control of Petroamerica. The reserve data included herein represents estimates only. In general, estimates of economically recoverable oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary considerably from actual results. All such estimates are to some degree speculative and classifications of reserves are only attempts to define the degree of speculation involved.
The assumptions relating to reserves and resources are contained in the reports of
Use of 'boe'
Throughout this press release, the calculation of barrels of oil equivalent ("boe") is at a conversion rate of 6,000 cubic feet ("cf") of natural gas for one barrel of oil and is based on an energy equivalence conversion method. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6,000 cf: 1 barrel is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead.