One Exploration Inc. (TSX-V:OE.A) and Cruiser Oil & Gas Ltd. (TSX-V:COG) are pleased to announce that they have entered into an arrangement agreement pursuant to which OneEx will acquire, by way of plan of arrangement, all of the issued and outstanding common shares of Cruiser on the basis of 0.0609 of a class A common share of OneEx for each common share of Cruiser.
The exchange ratio is based upon the parties' respective assessments of relative asset values, with a deemed share price of $1.15 for each class A common share of OneEx and a corresponding value of $0.07 for each common share of Cruiser, for an aggregate transaction value of $14.8 million.
Arrangement Overview
OneEx will issue approximately 12.9 million class A common shares to acquire Cruiser.
OneEx will acquire approximately $5.8 million cash, estimated sustainable production of approximately 80 boe/d (30% oil & liquids; 70% natural gas), and, based on OneEx's internal estimates of Cruiser's reserves, 539 Mboe of proved plus probable reserves (181 Mboe of proved reserves). Recently, Cruiser was successful in its efforts to bring its Swan Hills 15-26 well back on production. On its twenty-first day of testing, the well continues to produce at approximately 90 boe/d which, if sustained, will increase Cruiser's production to approximately 170 boe/d. Immediately following the completion of the Arrangement, OneEx will assess the full 30 day test results and implement a plan that maximizes the value of the Swan Hills property.
The Boards of Directors of both OneEx and Cruiser have unanimously approved the Arrangement. The Cruiser Board has unanimously concluded that the Arrangement is in the best interests of Cruiser and its shareholders, and has unanimously resolved to recommend that Cruiser shareholders vote their shares in favour of the Arrangement. Additionally, the directors and officers of Cruiser who are shareholders of Cruiser, and certain of Cruiser's principal shareholders, representing in the aggregate approximately 53% of the outstanding common shares of Cruiser, have entered into support agreements to vote their shares in favour of the Arrangement and otherwise support the transaction.
The Arrangement contains a reciprocal non-completion fee in the amount of $400,000 which is payable by Cruiser or OneEx to the other, as the case may be, in certain circumstances if the Arrangement is not completed. The Arrangement requires the requisite approval of Cruiser shareholders along with customary regulatory, court and other approvals. An information circular outlining the Arrangement will be mailed to shareholders of Cruiser in connection with the shareholders' meeting to be held to approve the Arrangement. The closing of the Arrangement and shareholder's meeting are proposed to be held prior to November 30, 2008.
Strategic Rationale and Pro Forma Operating and Financial Information
Through the completion of the Arrangement, OneEx continues to position itself as a growth-oriented junior with the following characteristics:
- Sustainable production of approximately 1,050 boe/d, weighted 80% to natural gas from high-quality reserves
- A combined reserve base of over 1.5 million boe (proved) and 2.6 million boe (proved plus probable), with a reserve life index greater than 6 years (proved plus probable)
- Significant financial strength and flexibility with a Q3 2008 net debt estimate of approximately $2 million, estimated cash flow in excess of $8 million per year and available bank facility capacity of $8 million
- 39.25 million class A common shares, 1.27 million class B common shares and options to purchase 2.12 million class A common shares outstanding
- A diverse mix of exploration, development and low-risk optimization projects
- Over $100 million dollars in tax pools
- Over 45,000 net acres of undeveloped land -- www.cnxmarketlink.com
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