- Offer to purchase Bonterra extended to January 25, 2021
- Minimum tender condition lowered to 50% of Bonterra Energy
Corp.'s outstanding shares
- Improved valuation following Obsidian Energy Ltd. share
price up 110% in the last month, compared to 4% for Bonterra Energy
Corp.
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CALGARY, AB, Dec. 21, 2020 /PRNewswire/ - OBSIDIAN ENERGY
LTD. (TSX: OBE) (OTCQX: OBELF) ("Obsidian Energy" or
the "Company") today announced that the Company has extended
its offer (the "Offer") to purchase all of the issued and
outstanding common shares (the "Bonterra Shares") of
Bonterra Energy Corp. (TSX: BNE) ("Bonterra") to
5:00 p.m. (Mountain Standard Time) on
Monday, January 25, 2021. The extension provides Bonterra
shareholders an additional opportunity to fully evaluate the
Offer's ability to create a stronger, well-positioned company with
a far superior future, reflect on recent changes in the relative
value of Obsidian Energy and Bonterra, and recognize the positive
impact of recent industry consolidation announcements on share
price performance.
"Our Offer is a compelling opportunity for Bonterra shareholders
to be part of an efficient, competitive company with a solid
future," said Stephen Loukas,
Obsidian Energy's Interim President and CEO. "Since we made our
original offer, industry consolidation has accelerated over the
past few months as boards seize opportunities to build increased
scale, efficiency and resilience. We expect this trend to continue
and we urge Bonterra shareholders to take advantage of this
opportunity. Together, we can make a stronger entity that can
make meaningful improvements to cash flow and inroads to lower debt
levels, which we believe has a clear path to a higher share
price."
In Canada, recent consolidation
announcements have spanned companies of all sizes, including the
merger of large cap companies Cenovus Energy Inc. and Husky Energy
Inc., and an accelerated pace of consolidation in the mid-cap space
with recent transactions announced by Whitecap Resources Inc.,
Tamarack Valley Energy Ltd. and Tourmaline Oil Corp. Obsidian
Energy's Offer builds on this industry consolidation activity,
creating a highly competitive, efficient combined entity that
management believes will be uniquely positioned as the natural
consolidator in the Cardium and be able to benefit from further
consolidation opportunities. Together, complementary assets and
combined resources are expected to result in significant
efficiencies. Obsidian Energy estimates that the combined entity
can save approximately $50 million in
the first year (equivalent to more than 80% of the value of all the
outstanding Bonterra Shares) and a total of $100 million in the first three years.
Over the past month, Obsidian Energy's share price has more than
doubled as the market recognized the Company's continued strong
operational and financial performance, an improved oil price
outlook and the initiation of a winter drilling program. In
addition, the share price reflected strong shareholder approval of
the share issuance related to the Offer and recommendations in
support of the Offer by independent proxy advisory firms to
Obsidian Energy's shareholders. Management believes the Offer has
always been compelling for Bonterra shareholders, providing strong
operational synergies that are expected to lower corporate
breakeven prices, improve the combined entity's financial
performance and drive significant anticipated share price
improvement. Now, with the Company's improved share price, the
Offer exchange ratio of two (2) Obsidian Energy shares (the
"Obsidian Shares") for each Bonterra share aligns with
current trading levels for Bonterra and Obsidian Energy.
*This news release contains multimedia – to view the full PDF
version as it is intended, please click here.*
Bonterra Price & Implied Obsidian Offer Performance
Overview
Price performance since the day
prior to Obsidian announcing proposed combination
Source: Factset as at 12/18/2020
Obsidian Energy also lowered the minimum tender condition of the
Offer so that the Bonterra Shares validly deposited to the Offer,
and not withdrawn, must represent greater than 50% (versus 66 2/3%)
of the then outstanding Bonterra Shares (on a fully diluted basis).
This amendment is being made based on current market intelligence
regarding the Offer, discussions with investors, feedback from
advisors and historic voting results of Bonterra shareholders.
Stephen Loukas continued,
"Bonterra had a low voter turnout at their most recent Annual
General Meeting; by lowering the tender threshold, we improve the
chance of success for Bonterra shareholders to take action and
support the transaction. We are aware that there is currently a
sizeable percentage of Bonterra shareholders who have yet to decide
on the Offer, and we believe the strength of the combination and
the recent trading prices of Bonterra and Obsidian Energy make this
a highly desirable transaction for Bonterra
shareholders."
Obsidian Energy recommends that Bonterra shareholders accept the
Company's compelling Offer to acquire all Bonterra Shares by
tendering their shares: two (2) Obsidian Shares for each Bonterra
Share tendered. The proposed combination represents an important
step to creating the "Cardium Champion", a combined entity with
greater size, improved financial metrics, increased capital markets
relevance and enhanced platform for future Cardium consolidation.
The combined entity will be better positioned than either Obsidian
Energy or Bonterra on a standalone basis. Additional details
regarding the Offer can be found in Canada on SEDAR at www.sedar.com, in
the United States on EDGAR at
www.sec.gov and on the Company's website at www.obsidianenergy.com.
As well, a Notice of Extension, Variation and Change that sets out
the variations and changes to the Offer described herein, along
with certain other variations and updated disclosures with respect
to the Offer will be filed with Canadian securities regulators in
due course this week.
ABOUT THE OFFER
The Offer is open for acceptance until 5:00 p.m. (Mountain Standard Time) on Monday,
January 25, 2021, unless extended, accelerated or withdrawn.
As set out in further detail in the original take over bid
circular dated September 21, 2020, as
varied by a Notice of Extension, Variation and Change to be filed
with Canadian securities regulators in due course this week
(collectively, the "Offer Documents"), the Offer is subject to
certain conditions, including: that the Bonterra Shares validly
deposited to the Offer, and not withdrawn, represent more than 50%
of the then outstanding Bonterra Shares (on a fully-diluted basis)
and certain regulatory and third party approvals (as outlined in
the Offer Documents) have been obtained, and other customary
conditions. Subject to applicable law, Obsidian Energy reserves the
right to withdraw, accelerate or extend the Offer and to not take
up and pay for any Bonterra Shares deposited under the Offer unless
each of the conditions of the Offer is satisfied or, if applicable,
waived by Obsidian Energy at or prior to the expiry of the Offer.
Bonterra shareholders are strongly encouraged to read the Offer
Documents carefully and in their entirety, since they contain
additional important information regarding Obsidian Energy and the
terms and conditions of the Offer as well as detailed instructions
on how Bonterra shareholders can tender their Bonterra Shares to
the Offer. Bonterra shareholders can also view the Offer specific
webpage on Obsidian Energy's website, where they can review
the Offer presentation, letter to Bonterra shareholders and other
key information related to the Offer.
ADDITIONAL READER ADVISORIES
NO OFFER OR SOLICITATION
This news release does not constitute an offer to buy or sell,
or a solicitation of an offer to sell or buy, any securities of
Obsidian Energy or Bonterra. The Offer is subject to a registration
statement (the "Registration Statement") filed with the United
States Securities and Exchange Commission (the "SEC") under the
U.S. Securities Act of 1933, as amended. The Registration Statement
includes various documents related to such offer and sale. OBSIDIAN
ENERGY URGES INVESTORS AND SHAREHOLDERS OF BONTERRA TO READ THE
REGISTRATION STATEMENT AND ANY AND ALL OTHER RELEVANT DOCUMENTS
FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE OFFER AS
THOSE DOCUMENTS BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of such
registration statement, as well as other relevant filings regarding
Obsidian Energy or the Offer, at the SEC's website (www.sec.gov)
under the issuer profile for Obsidian Energy, or on request without
charge from the Corporate Secretary of Obsidian Energy at Suite
200, 207 – 9th Avenue, SW, Calgary,
Alberta T2P 1K3.
NON-GAAP MEASURES
This news release contains references to debt and cash flow
which do not have a standardized meaning prescribed by
International Financial Reporting Standards and therefore are
considered non-GAAP measures; accordingly, they may not be
comparable to similar measures provided by other issuers. Debt is
bank debt, notes and, solely in respect of Bonterra, subordinated
debt (including the subordinated note(s) issued by Bonterra to
private related party investors). Cash flow is funds flow from
operations before changes in any non-cash working capital changes
and decommissioning expenditures.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document constitute
forward-looking statements or information (collectively
"forward-looking statements") within the meaning of the "safe
harbour" provisions of applicable securities legislation.
Forward-looking statements are typically identified by words such
as "anticipate", "continue", "estimate", "expect", "forecast",
"budget", "may", "will", "project", "could", "plan", "intend",
"should", "believe", "outlook", "objective", "aim", "potential",
"target" and similar words suggesting future events or future
performance. In particular, this document contains forward-looking
statements pertaining to, without limitation, the following: that
the Company will be changing the terms of its Offer and will make
the requisite filings in due course in order to do so; the
extension and revised terms that will be applicable to the Offer
and the intended reason for those changes; the anticipated
strategic, operational and financial benefits and synergies that
may result from the proposed combination between Obsidian Energy
and Bonterra; and that the combination is in the best interests of
both company's shareholders.
With respect to forward-looking statements contained in this
document, Obsidian Energy has made assumptions regarding, among
other things: that Obsidian Energy, which is subject to a short
term extension on its senior revolving credit facility and Bonterra
each continue to obtain extensions in respect of their facilities
and otherwise continue to satisfy the applicable covenants under
their respective senior revolving credit facilities, including
following the completion of the Offer and any subsequent second
step transaction, the ability to complete the Offer and the
proposed combination, integrate Obsidian Energy's and Bonterra's
businesses and operations and realize financial, operational and
other synergies from the proposed combination; that each of
Obsidian Energy, Bonterra and, following the completion of the
Offer, the combined entity will have the ability to continue as a
going concern and realize its assets and discharge its liabilities
in the normal course of business; the impact of regional and/or
global health related events, including the ongoing COVID-19
pandemic, on energy demand; that the combined entity's operations
and production will not be disrupted by circumstances attributable
to the COVID-19 pandemic and the responses of governments and the
public to the pandemic; that Bonterra's publicly available
information, including its public reports and securities filings as
of December 18, 2020, are accurate
and complete; global energy policies going forward, including the
continued agreement of members of OPEC, Russia and other nations to adhere to existing
production quotas or further reduce production quotas; Obsidian
Energy's ability to execute on its plans as described herein and in
its other disclosure documents and the impact that the successful
execution of such plans will have on Obsidian Energy and, following
the combination, the combined entity and the combined entities'
respective stakeholders; that the current commodity price and
foreign exchange environment will continue or improve; future
capital expenditure levels; future crude oil, natural gas liquids
and natural gas prices and differentials between light, medium and
heavy oil prices and Canadian, West Texas Intermediate (WTI) and
world oil and natural gas prices; future crude oil, natural gas
liquids and natural gas production levels, including that we will
not be required to shut-in additional production due to the
continuation of low commodity prices or the further deterioration
of commodity prices and our expectations regarding when commodity
prices will improve such that shut-in properties can be returned to
production; future exchange rates and interest rates; future debt
levels; the ability to execute our capital programs as planned
without significant adverse impacts from various factors beyond our
control, including weather, wild fires, infrastructure access and
delays in obtaining regulatory approvals and third party consents;
the combined entity's ability to obtain equipment in a timely
manner to carry out development activities and the costs thereof;
the combined entity's ability to market its oil and natural gas
successfully to current and new customers; the combined entity's
ability to obtain financing on acceptable terms; and the combined
entity's ability to add production and reserves through development
and exploitation activities.
Although Obsidian Energy believes that the expectations
reflected in the forward-looking statements contained in this
document, and the assumptions on which such forward-looking
statements are made, are reasonable, there can be no assurance that
such expectations will prove to be correct. Readers are cautioned
not to place undue reliance on forward-looking statements included
in this document, as there can be no assurance that the plans,
intentions or expectations upon which the forward-looking
statements are based will occur. By their nature, forward-looking
statements involve numerous assumptions, known and unknown risks
and uncertainties that contribute to the possibility that the
forward-looking statements contained herein will not be correct,
which may cause actual performance and financial results to differ
materially from any estimates or projections of future performance
or results expressed or implied by such forward-looking statements.
Such assumptions, risks and uncertainties are described in the
Offer Documents, Obsidian Energy's Annual Information Form and
other public filings, available in Canada on SEDAR at www.sedar.com, in
the United States on EDGAR at
www.sec.gov, and on the Company's website at
www.obsidianenergy.com. Readers are cautioned that such
assumptions, risks and uncertainties should not be construed as
exhaustive.
The forward-looking statements contained in this document speak
only as of the date of this document. Except as expressly required
by applicable securities laws, we do not undertake any obligation
to publicly update any forward-looking statements. The
forward-looking statements contained in this document are expressly
qualified by this cautionary statement.
KEY CONTACTS
OFFER INFORMATION AGENT AND DEPOSITARY
Kingsdale
Advisors
North American Toll-Free: 1-888-564-7333
Outside North America:
1-416-867-2272
Email: contactus@kingsdaleadvisors.com
MEDIA
Lisa Ottmann
Partner
Longview Communications & Public Affairs
Cell: 403-606 0866
Email: lottmann@longviewcomms.ca
OBSIDIAN ENERGY
Suite 200, 207 - 9th Avenue SW,
Calgary, Alberta T2P 1K3
Phone: 403-777-2500
Toll Free: 1-866-693-2707
Website: www.obsidianenergy.com
Investor Relations:
Toll Free:
1-888-770-2633
E-mail: investor_relations@obsidianenergy.com
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SOURCE Obsidian Energy Ltd.
