Vintage Petroleum has signed an agreement to sell its interests in Canada to Midnight Oil and Gas Ltd. for C$350 million (or approximately US$270 million), including estimated working capital of approximately C$27.5 million (or approximately US$21 million) as of the June 30, 2004, effective date of the transaction. In the agreement, Vintage commits to sell to Midnight Oil and Gas for cash all of the stock of its wholly-owned subsidiary which holds all of its Canadian assets. The boards of directors of both Vintage and Midnight Oil and Gas have approved the transaction with closing scheduled for November 30, 2004, subject to a financing contingency that must be satisfied by early October 2004, the approval by Midnight Oil and Gas shareholders of management's proposed Plan of Arrangement and normal conditions precedent to closing.
Upon closing, the proceeds from this sale will be used to reduce Vintage's outstanding debt under its revolving credit facility and for other general corporate purposes.
"We are pleased with this agreement as it represents a significant step in the execution of our 2004 plan to improve shareholder value," said Charles C. Stephenson, Jr., CEO. "In addition, the anticipated proceeds and book gain from this transaction will result in reducing our net debt-to-book capitalization ratio below the 40 percent range, thus achieving our stated financial target, and the enhancement of our flexibility to fund future production growth," added Mr. Stephenson.