ORLEN Upstream Canada Ltd, a wholly owned subsidiary of PKN ORLEN SA and Kicking Horse Energy Inc. have announced that they have entered into a definitive agreement pursuant to which ORLEN Upstream Canada will acquire all of the outstanding common shares of Kicking Horse for CAN$4.75 per share in cash. The transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta).
The consideration payable pursuant to the Arrangement represents a 47% premium to the most recent closing price of Kicking Horse's common shares on the TSX-V and a 60% premium to the 20 day volume weighted average trading price of Kicking Horse's common shares for the period ended 9 October 2015, being a total equity purchase price of CAN$293 million. The total transaction value, including the assumption of Kicking Horse's current net debt and amounts to be paid under the Arrangement to retire in-the-money Kicking Horse options, is approximately CAN$356 million.
Kicking Horse's core assets are strategically located in the Greater Kakwa area of Alberta where the Montney has successfully been developed, delivering condensate rich natural gas. The economics of this play are some of the best in Western Canada and provide ORLEN Upstream Canada with significant growth opportunities that are synergistic with their existing portfolio. Kicking Horse's assets are expected to add approximately 4000 boe/d of production (approximately 50% condensate) and 30 million boe of 2P reserves (as reported by Kicking Horse as at 31 December 2014), and significantly increase ORLEN Upstream Canada's position within the Montney Formation.
Matt Rees, the President of ORLEN Upstream Canada, stated: "This transaction represents a continuation of our strategy to grow our Canadian business, both through development of our existing lands and acquisitions of the right assets. It includes a large land position focused on the highly prospective Kakwa/Wapiti areas of Alberta with exposure to a very attractive part of the Montney. Supported by the significant financial capacity of PKN ORLEN, we believe we can accelerate production and development activities on these lands in order to fully realise the potential of Kicking Horse's asset base. We look forward to welcoming the employees of Kicking Horse to our team in Calgary and continuing their past success."
Steve Harding, the President and CEO of Kicking Horse, stated: "This transaction crystalises the significant value created by Kicking Horse, in its East Kakwa property, and its other Deep Basin and Canadian assets, through more than five years of successful land acquisition, exploration and development activities. Furthermore, it provides cash liquidity for all Kicking Horse shareholders at an attractive premium, and eliminates downside risk for our shareholders in a market that continues to be capital constrained and subject to significant commodity price uncertainty."
The terms and conditions of the proposed transaction will be summarised in Kicking Horse's information circular, which will be filed and mailed to Kicking Horse shareholders in late October 2015. The transaction is expected to close in late November or early December 2015.
Edited from press release by Angharad Lock