Bonanza Creek Energy, Inc. Announces Formation and Funding of New Rocky Mountain and Mid-Continent Energy Company With Focus on Niobrara Oil Shale

DENVER, Jan. 7, 2011 /PRNewswire/ -- Bonanza Creek Energy, Inc.

Bonanza Creek Energy, Inc. ("BCEI", "Bonanza Creek", or the "Company"), a newly formed independent oil and gas company, announced today that an investor group led by West Face Capital Inc., a Toronto-based investment management firm, together with Company management and the D. E. Shaw group, completed an equity financing of $265 million on December 23, 2010.  The transaction effectively monetizes the Company's corporate predecessor, Bonanza Creek Energy Company, LLC, repaying approximately $150 million in senior and subordinated debt to the D. E. Shaw group.  Upon the closing, BCEI acquired its predecessor's operating subsidiary, Bonanza Creek Energy Operating Company, LLC, and its 65 employees, proved reserves of approximately 30 million barrels of oil equivalent ("MMBoe") and 203 MMBoe Probable and Possible reserves located on its large Niobrara Oil Shale position in Colorado, the Cotton Valley trend of southern Arkansas and the San Joaquin Basin in California.

Stifel, Nicolaus & Co. and Rivington Capital Advisors, LLC acted as financial advisors to Bonanza Creek.

The Bonanza Creek management team is led by Michael Starzer, President and CEO, Gary Grove, EVP Engineering and Planning, Steve Black, EVP and COO and Patrick Graham, EVP Corporate Development.  Since 2006, management has grown the predecessor company from 1.5 MMBoe and 12 employees to its current size focusing on the Rocky Mountains, Mid-Continent, and Western Regions.  The management team has worked together in previous companies, and each member has over 25 years of industry experience.

In combination with this financing, Bonanza Creek completed an acquisition of Mid-Continent and Rocky Mountain assets from the Holmes Eastern Company, a Kern County, California-based private E&P company.  After this refinancing and the acquisition of the Holmes Eastern Company, the Company's senior debt outstanding as of December 31, 2010 was approximately $56 million on its revolving credit facility led by BNP Paribas.  Entering 2011, Bonanza Creek owns approximately 30 MMBoe of proved reserves and 203 MMBoe of Probable and Possible reserves that are greater than 70% oil and liquids weighted with current production of 4,170 Boe/d.  The Company plans to aggressively pursue development of its large existing infill, multiple horizon project inventory increasing production and cash flow.  In addition, the Company possesses approximately 70,000 net acres of Niobrara Oil Shale in Weld and Jackson Counties, Colorado with over 90 MMBoe of net recoverable resource potential to the Company through the use of horizontal drilling.

"This is an exciting time for Bonanza Creek with our large inventory of organic growth opportunities and we are very pleased to partner with West Face Capital in BCEI," said Mr. Starzer.  "West Face has distinguished itself as a very knowledgeable energy investor, and I believe that Bonanza Creek is well positioned for continued growth and long-term success through this partnership."  Mr. Starzer continued, "The success of Bonanza Creek is a reflection of the dedication of our employees and financial partners and I want to thank all our employees and capital providers for their service and support.  I also wish to recognize the efforts of Rivington Capital Advisors and Stifel, Nicolaus & Co. in assisting Bonanza Creek with this transaction.  I especially wish to thank the D. E. Shaw group and Mr. Fred Holmes for their faithful financial support in the past, and we are grateful for their continued investment in Bonanza Creek."

About Bonanza Creek Energy:

Bonanza Creek Energy, Inc. is a newly formed independent oil and gas company with headquarters in Denver, Colorado. Bonanza Creek's business strategy is focused on the acquisition, exploration, and development of oil and gas properties in the Rocky Mountain and Mid-Continent regions of the United States. Bonanza Creek is led by a highly talented team of technical and business professionals, many of whom have worked together for over ten years successfully building previous companies.  For additional information, please visit www.bonanzacrk.com.  

About West Face Capital:

Toronto-based West Face Capital Inc. ("WFC") is an institutional investment manager with over $1.8 billion in capital under management. The WFC group invests across the capital structure in event-oriented investments with specializations in natural resource industries, distressed debt, high yield debt, and common equity.

About the D. E. Shaw Group

The D. E. Shaw group is a global investment and technology development firm with more than 1,300 employees; approximately $20 billion in investment capital as of October 1, 2010; and offices in North America, Europe, the Middle East, and Asia.  The D. E. Shaw group's direct capital unit focuses on providing debt and equity capital to small and midsized businesses in all industry sectors, including energy companies.  

About Rivington Capital Advisors, LLC

Rivington Capital Advisors, LLC is an investment banking firm specializing in private capital and mergers and acquisition transactions for the small and mid-cap energy sectors.  Founded in 2002, Rivington has successfully closed 55 transactions having a total transaction value exceeding $3.3 billion.  To learn more about Rivington, please visit the company's web site at www.rivingtoncap.com.

About Stifel, Nicolaus & Co.

Founded in 1890, Stifel, Nicolaus & Company, Incorporated is the principal subsidiary of Stifel Financial Corp. (NYSE: SF), a financial services holding company headquartered in St. Louis. Stifel, Nicolaus is a full-service retail and institutional brokerage and investment banking firm with 206 offices in 36 states and the District of Columbia, and 3 European offices through Stifel, Nicolaus Limited. To learn more about Stifel, please visit the company's web site at www.stifel.com.

Cautionary Statement

Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, particularly any express or implied statements concerning future financial condition or operating results.  Although Bonanza Creek Energy, Inc. believes that the expectations reflected herein are reasonable, the matters discussed in this release involve risks, uncertainties, and other factors that may delay, prevent or adversely affect the transaction or its planned activities and operations.  There can be no assurance that such expectations will prove correct.  All forward-looking statements are expressly qualified by this cautionary statement.

SOURCE Bonanza Creek Energy, Inc.