Raging River Exploration Inc. Announces Dodsland Viking Acquisitions, $56 Million Bought Deal Financing, Expanded Credit Facility and Increased 2012 Guidance

27 Nov 2012 08:24 ET

Marketwire Canada - NFD


Raging River Exploration Inc. ("Raging River" or the "Company") (TSX VENTURE:RRX) is pleased to announce that the Company has entered into agreements to acquire certain properties and corporations with assets located in the Dodsland area of southwest Saskatchewan (the "Acquisitions").


Through the Acquisitions, Raging River is acquiring a 100% working interest in 700 boe/d (90% light oil) of production and 20 net sections of highly prospective land targeting Viking oil. The Acquisitions also include a 100% owned and operated 4,500 bbl/d oil processing facility that has excess treating capacity of 4,000 bbls/d. The facility provides Raging River with the option to process its existing production allowing additional volumes to be placed on rail when market conditions dictate.

The total consideration is approximately $65 million (subject to customary closing adjustments and regulatory approvals including that of the TSX Venture Exchange). The consideration for the Acquisitions is comprised of approximately $43 million of cash and the issuance of 8,375,000 common shares of Raging River ("Common Shares") at a deemed price of $2.65 per Common Share. These Common Shares will be issued to a small group of sophisticated investors.

The Acquisitions include the purchase of two private companies and a property acquisition from a senior energy producer all of which are anticipated to close on or before December 31, 2012.

The Acquisitions have the following characteristics:

Viking Light Oil Production(1):       630 bbls/dAssociated Natural Gas Production(1): 420 mcf/dTotal Production(1):                  700 boe/dProved plus Probable Reserves(2):     2.9 MMboe (92% Viking light oil)Land:                                 12,800 net acresTotal Development Drilling Locations: 150 net risked horizontal wells (80%                                      unbooked)Facilities:                           100% interest in a 4,500 bbl/d oil                                      processing facilityCurrent Operating Netback(3):         $51.50/boe 1. Based on forecasted average volumes for December 2012. 2. Gross Company Reserves. Reserves are prepared by Sproule Associates    Limited effective December 31, 2012 in accordance with National    Instrument 51-101 and the COGEH Handbook. Gross Company Reserves means    the company's working interest reserves before the calculation of    royalties, and before the consideration of the company's royalty    interests. 3. Based on Edmonton Light pricing of Cdn $80/bbl and AECO pricing of    $3/mcf and calculated by subtracting royalties and operating costs from    revenues.


Utilizing Edmonton Light oil pricing of Cdn $80/bbl and AECO gas pricing of $3/mcf, the purchase price of the Acquisitions is approximately 5.0 times their current run rate cash flow.

Net of the internally estimated land value of $6.4 million the Acquisitions have the following metrics:

Production:                            $83,900 per producing boeProved plus Probable Reserves(1):      $20.25 per boeProved plus Probable Recycle Ratio(2): 2.7 times 1. Reserves as disclosed above. 2. Utilizing netback shown above.

Dundee Securities Ltd. acted as Raging River's financial advisor on the Acquisitions. FirstEnergy Capital Corp. acted as Raging River's strategic advisor in regards to the acquisition from the senior energy producer.


Raging River has entered into an agreement, on a bought deal basis, with a syndicate of underwriters, co-led by Peters & Co. Limited and FirstEnergy Capital Corp. and including, Dundee Securities Ltd., Desjardins Securities Inc., Paradigm Capital Inc., CIBC World Markets Inc., National Bank Financial Inc., Cormark Securities Inc., and Scotia Capital Inc. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase for resale, 21,000,000 Common Shares of Raging River at a price of $2.65 per Common Share for gross proceeds of $55.7 million (the "Financing").

The net proceeds from the Financing will be used to reduce outstanding indebtedness under the Company's current credit facility, a portion of which will be used to fund the Acquisitions.

Closing of the Financing is expected on or about December 18, 2012 and is subject to certain conditions, including, but not limited to, the receipt of all necessary regulatory approvals including the approval of the TSX Venture Exchange.


Inclusive of the Acquisitions Raging River now expects to exit 2012 at 3,700 boe/d (96% oil).


The Acquisitions allow Raging River to continue its consolidation of the Viking light oil resource play in the Dodsland Area with the addition of 630 bbls/d of light oil production and 12,800 net acres of land that have in excess of 150 net risked horizontal development drilling locations.

Proforma the Acquisitions Raging River continues to have an extensive light oil drilling inventory of in excess of 1,000 net horizontal wells, 100% of which fall within our Dodsland core area. This inventory represents 10+ years of defined low risk development drilling that can be financed within cash flow and prudent use of the Company's credit facilities.

As a result of the Company's continued operational success and in conjunction with the closing of the Acquisitions, Raging River's borrowing base with its current credit facility will be increased to $100 million from $65 million. As of January 1, 2013, proforma the Acquisitions and Financing, net debt is anticipated to be approximately $25 million. With the expanded credit facility and stronger proforma cash flow, 2013 capital expenditures are expected to be $90 million to $100 million. Formal 2013 production and capital guidance is expected to be issued in mid-December.