Management of Enterra believes this transaction will be accretive immediately to cash flow on a per unit basis, net asset value on a per unit basis, production on a per unit basis and reserves on a per unit basis. Anticipated benefits to unitholders from this transaction include the following:
As per Enterra's business plan, these properties will be developed by way of joint venture. JED Oil Inc. has done most of the development drilling for Enterra, however with the aggressive drilling program JED has scheduled over the next 18 months, JED will not be able to provide the necessary resources as its capital, and more importantly, people are dedicated to its existing 18 month drilling program. As a result, Enterra plans to enter into a joint venture arrangement with Petroflow Energy Inc. to develop these properties to achieve their production potential. Petroflow presented this acquisition opportunity to Enterra as a result of its relationship with Macon Resources Ltd. Macon has been engaged by Enterra to provide management services to the Trust as well as to bring the Trust potential acquisitions. Macon holds approximately a 10% interest in Petroflow Energy.
"This acquisition is consistent with and extends Enterra's business plan, providing both existing production and substantial development opportunities," said Keith Conrad, President and CEO of Enterra. "We also hope to supplement our current staff by retaining the existing staff in Oklahoma once the acquisition closes."
In connection with the financing agreement Enterra entered into and announced in April 2005 with Kingsbridge Capital Limited ("Kingsbridge"), Enterra reported that it has drawn (U.S.) $13,333,332 for which it issued 689,079 trust units over the period from Nov. 15 to Dec. 8. The term of this commitment is 24 months or until the total commitment of $100 million is drawn. Enterra has registered the trust units as per the agreement. Enterra's prospectus is available on the systems for electronic document analysis and retrieval (SEDAR) and the EDGAR website of the US Securities and Exchange Commission.
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