Ellora Energy Notes Sale of Co. for $695MM

Ellora Energy announced the execution of a definitive agreement and plan of merger with an undisclosed buyer.

Under the terms of the agreement, Ellora Energy stockholders will receive base consideration of $695 million in cash, which after adjustment for certain items is expected to result in approximately $13.10-13.35/share on a projected fully diluted share count basis. The transaction is subject to escrow and customary closing conditions, including approval by Ellora's stockholders. Under the terms of the agreement, $35 million will be placed in escrow. Proxy materials are expected to be sent to stockholders within the next 20 days with a stockholder vote anticipated before the end of August.

The Company's year-end 2009 Proved Reserves were 61 Bcfe excluding the properties in Kansas and Colorado that were sold on February 1, 2010, and were 99% gas and 48% Proved Developed. For the quarter ending June 30, 2010, company production was 13.2 MMcfe/d, and the company holds interests in approximately 46,000 net acres in the Haynesville / Bossier plays. In addition, Ellora owns an approximate 100-mile pipeline system in the area. At June 30, 2010, Ellora's estimated net working capital was approximately $125 million and bank debt was $0.

The reserve estimates using SEC guidelines were prepared by the Company's independent reserve engineers, Ryder Scott Company. Mayer Brown has advised the Company as to the legal aspects of the transaction. Tudor, Pickering, Holt & Co. Securities, Inc. has provided a fairness opinion in connection with the merger.


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