Bow Valley Divests Interest in UK North Sea's Peik Asset
Bow Valley's UK subsidiary has entered into a Purchase and Sale Agreement with an industry partner to sell all of its interest in Block 9/15a in the UK sector of the North Sea for US $30 million. Bow Valley owns a 66.667% interest in Block 9/15a which contains a portion of the Peik natural gas/condensate field which straddles the UK/Norwegian trans median boundary.
The sale is subject to normal industry terms and conditions including, regulatory approval, a third party pre-emption right and consent of the Company's UK bank lending group. The proceeds of the sale will be used firstly to reduce the Company's outstanding indebtedness and then for general working capital purposes. The Company was aided in the sales process by Tristone Capital acting as agent in respect of the sale and Scotia Waterous as financial advisor.
As previously announced, that as a consequence of the Company's bank indebtedness maturities on December 31, 2008 and the current global economic environment, its Board of Directors appointed a Special Committee composed of independent directors, and has engaged Scotia Waterous Inc. to examine and consider a range of strategic alternatives available to the Company. These alternatives will include, among other things, exploring potential asset divestments, equity alternatives, strategic alliances, joint venture opportunities, mergers or a corporate sale transaction.
R.G. Moffat, President and CEO of Bow Valley stated, "The proceeds of the Peik sale will help address the maturing bank debt of Bow Valley's UK subsidiary. Importantly, the sale removes a significant future capital
commitment to develop this non-producing field. No decision on any particular strategic alternative emanating from the Scotia process has been reached but it is believed that the sale of Peik will enhance the options available to the Company."
No decision on any particular alternative has been reached at this time and there can be no assurance that the strategic review process will result in any change in the Company's current operations or that the Company will pursue any particular transaction. Bow Valley does not intend to make any further announcement regarding the strategic review process or the asset disposition process unless and until its Board of Directors has approved a specific transaction or other course of action or otherwise deems disclosure of developments is appropriate.
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