Pulse Seismic to Purchase Divestco Data Library
Pulse Seismic has signed a binding letter of intent to purchase the entire 2D and 3D seismic data library owned by Divestco which, among other benefits, will more than double Pulse's overall 3D seismic data library.
The seismic library comprises approximately 80,000 net kilometres of 2D data and approximately 15,000 net square kilometres of high-quality 3D data, including in the Cutbank Ridge area of B.C. the Montney shale gas play of northeast B.C. and several other prospective oil and natural gas plays in the Deep Basin area of Alberta. With this acquisition, Pulse will own the largest licensable, contiguous 3D seismic data set in B.C.
The purchase price for Divestco's seismic data library is $50 million cash plus 14,285,000 Pulse common shares. The effective date of the transaction is July 1, 2010, but Divestco retains the benefit of certain pending seismic data transactions. The cash portion will be financed by a combination of available advances under Pulse's syndicated acquisition credit facility and cash on hand. The Pulse common shares will be distributed by Divestco to its shareholders.
The transaction is subject to certain conditions, including approval by the shareholders of Pulse and Divestco, approval from Pulse's syndicated bank group, receipt of formal fairness opinion by Pulse, stock exchange and regulatory approvals, completion of due diligence and the execution of definitive legal documents.
The transaction is expected to close in September 2010.
The binding letter of intent contains typical non-solicitation provisions for Divestco and the right of Pulse to match any superior proposal. The binding letter of intent also provides for break fees of $3.5 million if either party terminates the transaction under certain circumstances.
"The addition of this 3D seismic, which includes the largest contiguous surveys in the Cutbank Ridge area of B.C. totalling approximately 5,250 net square kilometres, complements our existing seismic library and provides extensive continuous 3D seismic coverage to our customers," stated Doug Cutts, President & CEO of Pulse. "This acquisition extends our 3D coverage of the Edson-Grande Prairie multi-zone corridor in Alberta into the Montney shale gas play of northeast B.C. Overall, Pulse increases its 3D data library by approximately 127 percent, affirming the Company's execution of a strategy of focused growth in our core areas."