GEOCAN Sells $51.4 Million in Assets
GEOCAN Energy Inc. announced that pursuant to its November 14, 2007 press release when the Company had established a special committee to assess and recommend debt reduction strategies, GEOCAN has now agreed to sell all of its heavy oil assets in the Lloydminster area and in a separate transaction, to sell some minor Unit and non-Unit interests in the Carrot Creek area of west central Alberta to undisclosed buyers. The sales proceeds payable to GEOCAN for both transactions, before normal closing adjustments, will be approximately $51.4 million. The effective date for the Lloydminster area transaction is February 1, 2008 and, for the Carrot Creek area transaction is December 1, 2007. Both transactions are subject to industry standard closing conditions. The transactions are expected to close in late February or early March 2008.
These transactions represent average net December production rates of 1453 BOE/d of heavy oil and associated natural gas from the Lloydminster area and 43 BOE/d of light oil and natural gas production from the Carrot Creek area. GEOCAN's interest in its Dee Valley SAGD property, which is comprised of probable reserves, is also included in the Lloydminster transaction.
The proceeds from the transaction will significantly strengthen the Company's balance sheet and reduce its total debt to approximately $3 million. The Company is currently negotiating its go-forward credit facility with its existing lender and expects to have a facility that will remain significantly undrawn. Following closing of these transactions GEOCAN will have production of approximately 1000 BOE/d (95% operated); split 37% light and medium oil and 63% natural gas. The Company will remain strategically focused within three core areas, namely, east and central Alberta, west central Alberta and northeastern British Columbia. GEOCAN will continue to hold 137,000 gross (88,132 net) undeveloped acres of land within its three core areas and, will have estimated tax pools at yearend 2007 of approximately $43 million.
With a stronger balance sheet the Company will be able to devote cash flow from operations to optimization plans in its three core areas as well as to continue to drill and develop internally generated play concepts.
- Arsenal to Acquire GEOCAN's Shares (Aug 08)
- GEOCAN Closes Sale of Heavy Oil Assets for $50.9 Million (Mar 07)
- GEOCAN Appoints Tristone Capital to Review Strategic Alternatives (Mar 07)