Sayer Energy Advisors ("Sayer") was engaged to act as Diaz's exclusive financial advisor with respect to the Transaction. Sayer has advised the Board of Directors of Diaz and its Special Committee that, in its opinion, subject to review of final documentation, the consideration to be received by Diaz shareholders pursuant to the Transaction is fair, from a financial point of view, to Diaz shareholders.
Certain shareholders, including the directors and members of senior management of each of Tuscany and Diaz, who beneficially own or exercise control or direction over approximately 39% of the outstanding Tuscany common shares and 75% of the outstanding Diaz common shares, have indicated that they intend to enter into support agreements pursuant to which they agreed to vote their Tuscany and Diaz shares, as the case may be, in favour of the Transaction.
Robert W. Lamond and Humboldt Capital Corporation, a company controlled by him own 45.1 million shares of Tuscany (37.7% of the outstanding shares of Tuscany) and 74.2 million shares of Diaz (75.3% of the outstanding shares of Diaz). Assuming the Transaction is completed as contemplated they will own 8.4 million shares of Tuscany post consolidation (45.1% of the post consolidated shares of Tuscany outstanding).
Benefits of the Transaction
The management of both Tuscany and Diaz believe the business combination will have synergistic benefits for the future growth of the companies. One of Tuscany's major properties at Macklin, Saskatchewan is jointly owned by the two companies and has been assigned proved and probable reserves for 10 additional horizontal drilling locations in the independent engineering evaluations prepared for the companies. In addition, both companies share working interests in other oil prospects in Alberta and Saskatchewan that are in various stages of development which may also be accelerated as a result of the transaction.
Where amounts are expressed on a barrel of oil equivalent (BOE) basis, natural gas volumes have been converted to barrels of oil on the basis of six thousand cubic feet (mcf) per barrel (bbl). Barrels of oil equivalent may be misleading, particularly if used in isolation. A BOE conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel and is based on an energy equivalent conversion method applicable at the burner tip and does not represent an economic 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 mcf: 1 bbl, using a conversion on a 6 mcf: 1 bbl basis may be misleading as an indication of value.
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning the combined company's reserves, undeveloped landholdings and anticipated benefits from the Transaction. The forward-looking statements and information are based on certain key expectations and assumptions made by Tuscany and Diaz, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates and reserve volumes; the timing of receipt of regulatory and shareholder approvals, the performance of existing wells; the success obtained in drilling new wells; and the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Although Tuscany and Diaz believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Tuscany and Diaz can give no assurance that they will prove to be correct.
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