Lone Pine Resources Canada and Arsenal Energy Enter Strategic Business Combination

Published: June 27, 2016 |

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Lone Pine Resources Canada Ltd. and Arsenal Energy Inc. have entered into a definitive agreement to affect a business combination by way of a plan of arrangement under the Business Corporations Act (Alberta).

Completion of the arrangement will result in the shareholders of Lone Pine and Arsenal receiving common shares of a new corporation (New Lone Pine) in substitution for their existing shares, with New Lone Pine in turn indirectly holding the combined undertakings of Lone Pine and Arsenal. Upon completion of the arrangement, which is expected to occur in September 2016, former Lone Pine security holders will hold 77 percent of the New Lone Pine shares and former Arsenal security holders will hold 23 percent of the New Lone Pine shares.

New Lone Pine will retain the Lone Pine name and will be led by an experienced executive team and board of directors comprised of key individuals from both Lone Pine and Arsenal, including Tim Granger as president and CEO, and Patrick McDonald as chairman of the board. Upon completion of the arrangement, New Lone Pine is anticipated to have production of more than 4,000 boe/d (approximately 71 percent oil and liquids), proved plus probable reserves of 18.5 MMboe as of December 31, 2015, and a $55 to $60 million credit facility depending on the outcome of certain Arsenal non-core asset dispositions.

“We are very pleased to support the business combination of Lone Pine and Arsenal. We believe the new company will benefit from scale efficiencies, attractive and complementary land positions, and a pristine balance sheet, which should position New Lone Pine for profitable growth to help drive shareholder returns,” said Brendan McGovern, managing director at Goldman Sachs Asset Management (GSAM), funds of which are a majority shareholder of Lone Pine.

“The arrangement with Lone Pine will put the combined company in an excellent position to accelerate the development of its very attractive inventory of drilling opportunities at a time of reduced service costs and recovering prices as well as extend its leadership position in its core areas,” said Neil Mackay, chairman of the board of directors of Arsenal.

The boards of directors and executive management teams of both Lone Pine and Arsenal believe that the combination will provide significant benefits to the shareholders of both companies. The assets of the two companies are complementary, with adjacent and overlapping land positions across certain areas, and the respective teams have taken a similar approach to development of core areas to date. Combining these complementary assets will create an oil-weighted, high-growth oriented oil and gas company positioned to generate value with a strong balance sheet, attractive drilling prospects and significant financial and operational flexibility.

New Lone Pine will retain key personnel from both entities and will be led by Tim Granger as president and CEO. The executive team will also include Mimi Lai as vice president, finance and CFO; Robert Guy as vice president, operations; and Tony van Winkoop, as vice president, exploration. New Lone Pine’s board of directors will have proportional representation from the two companies and will be led by Lone Pine’s current chairman, Patrick McDonald, with the balance of the board to be detailed in the joint information circular.

To stop by Lone Pine’s website, CLICK HERE

To stop by Arsenal’s website, CLICK HERE

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