Equal will use the proceeds from the Lochend sale to fully repay the
amount outstanding on its credit facility and estimates that it will
have approximately $10 million in cash after the repayment. Net debt
will total approximately $35 million including outstanding convertible
debentures. In light of this disposition the Company's banking
syndicate is reviewing the limit on the Company's credit facility.
Equal estimates that the credit facility will be in the range of $110
million secured against the borrowing base of the Central Oklahoma
Equal's last remaining Canadian asset is represented by a royalty stream
of payments from producing wells in Western Canada. The Company will
continue to operate its Central Oklahoma assets consisting of
approximately 7,800 boe/d of liquids rich natural gas where strong
historical drilling success has been experienced. There is an
established inventory of future drilling locations and a staff of
experienced people in Oklahoma managing these assets. Management
believes that in addition to successful drilling, there is significant
additional upside from natural gas and NGL commodity price recovery.
The Company is still conducting its Strategic Review process and is
evaluating proposals for the sale of the remaining royalty assets
which, if sold, will represent an exit from all Canadian operations.
Equal's Special Committee of the Board of Directors and management are
moving to the final step in the Strategic Review Process to finalize
the go forward strategy for the Company. A Canadian Trust, US Master
Limited Partnership and an Exploration and Production Corporation are
all being considered. The make-up of the Board of Directors and
Executive Management team as well as an overall go forward manpower
plan will follow the Company structure decision. Equal expects to
conclude the Strategic Review process shortly after the conclusion of
the evaluation of the royalty proposals, likely by late November 2012.
Equal is being advised on the strategic review process by
Scotiabank. Desjardins Capital Markets is also advising Equal on the
strategic review process relating to Equal's Canadian assets.
About Equal Energy Ltd.
Equal is an exploration and production oil and gas company based in
Calgary, Alberta, Canada with its United States operations office
located in Oklahoma City, Oklahoma. Equal's shares and convertible
debentures are listed on the Toronto Stock Exchange under the symbols
(EQU, EQU.DB.B) and Equal's shares are listed on the New York Stock
Exchange under the symbol (EQU). The oil and gas properties are
Oklahoma. Equal has compiled a multi-year drilling inventory for its
Hunton liquids rich natural gas property in Oklahoma.
Certain information in this press release constitutes forward-looking
statements under applicable securities law including the timing or
uncertainty of the sale of Equal's royalty interests, the repayment of
the bank facility, the outcome of the lenders review of the limit of
the credit facility and the timing and certainty of any further action
in relation to the Company's strategic review process. Any statements
that are contained in this press release that are not statements of
historical fact may be deemed to be forward-looking statements.
Forward-looking statements are often identified by terms such as "may,"
"should," "anticipate," "expects," "seeks" and similar expressions.
Forward-looking statements necessarily involve known and unknown risks,
such as risks associated with closing the Royalties sale, repayment of
the bank credit facility, the future amount of the bank credit
facility, oil and gas production; marketing and transportation; loss of
markets; volatility of commodity prices; currency and interest rate
fluctuations; imprecision of reserve estimates; environmental risks;
competition; incorrect assessment of the value of acquisitions; failure
to realize the anticipated benefits of dispositions; inability to
access sufficient capital from internal and external sources; changes
in legislation, including but not limited to income tax, environmental
laws and regulatory matters. Readers are cautioned that the foregoing
list of factors is not exhaustive.
Readers are cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information,
although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ
materially from those anticipated forward-looking statements contained
in this press release are expressly qualified by this cautionary
Additional information on these and other factors that could affect
Equal's operations or financial results are included in Equal's reports
on file with Canadian and U.S. securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com), the SEC's website (www.sec.gov), Equal's website (www.equalenergy.ca) or by contacting Equal. Furthermore, the forward looking statements
contained in this news release are made as of the date of this news
release, and Equal does not undertake any obligation to update publicly
or to revise any of the included forward-looking statements, whether as
a result of new information, future events or otherwise, except as
expressly required by securities law.
Conversion: Natural gas volumes recorded in thousand cubic feet ("mcf")
are converted to barrels of oil equivalent ("boe") using the ratio of
six (6) mcf to one (1) barrel of oil ("bbl"). Boe's may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 mcf:
1bbl is based on an energy equivalent conversion method primarily
applicable at the burner tip and does not represent a value equivalent
at the wellhead. All dollar values are in Canadian dollars unless