Delphi Energy Corporation
TSX:DEE
June 26, 2008
Delphi Energy Announces Peace
River Arch Acquisition and Financing
NOT FOR DISTRIBUTION
TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
CALGARY - Delphi Energy Corp. is pleased to
announce that it has entered into a purchase and sale agreement to acquire oil
and natural gas properties producing approximately 650 barrels of oil
equivalent per day (boe/d), predominantly located in the Peace River Arch and
directly north of the Company's Hythe area.
PROPERTY ACQUISITION
The properties are characterized as stable, low decline, high netback
production with an acquisition cost of $49,900 per producing barrel, primarily
weighted towards natural gas (80 percent) on approximately 24,000 net acres of
developed land. The Company will acquire approximately 1.2 million boe of
proven reserves and 1.6 million of proven plus probable reserves at an average
purchase price of $26.43 per proven boe and $20.38 per proven plus probable
boe, excluding the estimated value of undeveloped land and seismic. The reserve
estimates are in accordance with NI 51-101 with 98 percent of the reserves
classified in the producing category.
The acquisition includes ownership in key natural gas infrastructure to support
future growth from several areas. This infrastructure includes a 100 percent
working interest in the Clayhurst Gas Plant with capacity of 10.0 million cubic
feet per day (mmcf/d), a 5.8 percent working interest in the Progress Gas Plant
with capacity of 142.0 mmcf/d and ownership in additional field compression and
gathering systems throughout the properties. The Company believes significant
development and exploration potential exists on the 35,000 net acres of undeveloped
land (a 39 percent increase to Delphi's
undeveloped land position) with 292 kilometres of 2D seismic included in the
acquisition.
The total purchase price is $38.5 million, before closing adjustments,
including undeveloped land and seismic with an estimated value of approximately
$5.9 million. Approximately 250 boe/d of the vendor's working interest
production is subject to "right of first refusal" (ROFR) provisions.
The results of the ROFRs will be known no later than mid-summer, with closing to
follow immediately thereafter. The acquisition will be funded from the
Company's credit facilities and an equity financing.
FINANCING
For the financing, the Company has entered into an agreement with a syndicate
of underwriters, with RBC Capital Markets and Macquarie Capital Markets Canada
Ltd. as co-lead underwriters, pursuant to which such underwriters have agreed
to purchase, on a bought deal basis, 6,316,000 common shares of the Company at
a price of $2.85 per share and on a best efforts basis, 3,530,000 flow-through
common shares of the Company at a price of $3.40 per share. Gross proceeds of
the offering will be approximately $30 million.
The share issue will be an underwritten public offering in all provinces of Canada,
other than Quebec, by way of a short form
prospectus, and in the U.S.
on a private placement basis pursuant to exemptions from the registration
requirements pursuant to Rule 144A and Regulation D of the United States
Securities Act of 1933, as amended.
The financing is scheduled to close on or about July 17, 2008 and is subject to
regulatory approval and completion of definitive documentation.
GUIDANCE
Production for 2009 is now expected to average between 7,700 and 8,300 boe/d,
assuming no ROFRs are exercised. The mid-point of 8,000 boe/d for 2009
represents an increase of approximately 25 percent over the upwardly revised
forecast 2008 average volumes of 6,300 to 6,500 boe/d.
Delphi Energy is a Calgary-based company
that explores, develops and produces oil and natural gas in Western
Canada. The Company is managed by a proven technical team. Delphi
trades on the Toronto Stock Exchange under the
symbol DEE.
For further information please
contact:
Delphi Energy Corp.
David J. Reid
President & CEO
(403) 265-6171
Fax: (403) 265-6207
or
Delphi Energy Corp.
Brian P. Kohlhammer
V.P. Finance & CFO
(403) 265-6171
Fax: (403) 265-6207
or
Delphi Energy Corp.
300, 500 - 4 Avenue S.W.
Calgary,Alberta
T2P
2V6
Email: info@delphienergy.ca
Website: www.delphienergy.ca
Forward-Looking
Statements: This press release contains
forward-looking statements and forward-looking information within the meaning
of applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", may",
"will", "should", believe", "intends",
"forecast", "plans", "guidance" and similar
expressions are intended to identify forward-looking statements or information.
More particularly and without limitation, this press release contains forward
looking statements and information relating to the Company's risk management
program, petroleum and natural gas production, future funds flow from
operations, capital programs, natural gas prices and debt levels. The
forward-looking statements and information are based on certain key
expectations and assumptions made by Delphi, including expectations and assumptions
relating to prevailing commodity prices and exchange rates, applicable royalty
rates and tax laws, future well production rates, the performance of existing
wells, the success of drilling new wells, the capital availability to undertake
planned activities and the availability and cost of labour and services.
Although the Company believes that the expectations reflected in such
forward-looking statements and information are reasonable, it can give no
assurance that such expectations will prove to be correct. Since
forward-looking statements and information address future events and
conditions, by their very nature they involve inherent risks and uncertainties.
Actual results may differ materially from those currently anticipated due to a
number of factors and risks. These include, but are not limited to, the risks
associated with the oil and gas industry in general such as operational risks
in development, exploration and production, delays or changes in plans with
respect to exploration or development projects or capital expenditures, the
uncertainty of estimates and projections relating to production rates, costs
and expenses, commodity price and exchange rate fluctuations, marketing and
transportation, environmental risks, competition, the ability to access
sufficient capital from internal and external sources and changes in tax,
royalty and environmental legislation. Additional information on these and
other factors that could affect the Company's operations or financial results
are included in reports on file with the applicable securities regulatory
authorities and may be accessed through the SEDAR website (www.sedar.com).
The forward-looking statements and information contained in this press release
are made as of the date hereof for the purpose of providing the readers with
the Company's expectations for the coming year. The forward-looking statements
and information may not be appropriate for other purposes. Delphi undertakes no
obligation to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.
NON GAAP Measures. The press release
contains the terms "funds from operations" and "funds from
operations per share" which are not recognized measures under Canadian
generally accepted accounting principles. The Company uses these measures to help
evaluate its performance. Management uses funds from operations to analyze
performance and considers it a key measure as it demonstrates the Company's
ability to generate the cash necessary to fund future capital investments and
to repay debt. Funds from operations is a non-GAAP measure and has been defined
by the Company as net earnings plus the addback of non-cash items (depletion,
depreciation and accretion, stock-based compensation, future income taxes and
unrealized gain/(loss) on risk management activities) and excludes the change
in non-cash working capital related to operating activities and expenditures on
asset retirement obligations and reclamation. The Company also presents funds
from operations per share whereby amounts per share are calculated using
weighted average shares outstanding consistent with the calculation of earnings
per share. Delphi's determination of funds from operations may not be
comparable to that reported by other companies nor should it be viewed as an
alternative to cash flow from operating activities, net earnings or other
measures of financial performance calculated in accordance with Canadian GAAP.
A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio
of six thousand cubic feet of gas to one barrel of oil, may be misleading,
particularly if used in isolation. A boe conversion is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.
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