CIOC announces equity and debt financing, proposes new name

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By CPE News

pcJ News Briefs – Canadian International Oil Corp. (CIOC), a private oil and gas producer majority owned by Riverstone Holdings LLC, has officially announced the closing of equity and debt financing.

Credit Suisse acted as sole placement agent for the debt issuance and Burnet, Duckworth & Palmer LLP acts as CIOC’s legal counsel.

News Release

CIOC Announces Equity Commitment, Debt Financing, Operational Update, Executive Addition and Proposed Name Change

CALGARY, July 25, 2017 /CNW/ – CIOC (“Canadian International Oil Corp.” or the “Company”), a privately owned oil and gas producer focused on the Montney and Duvernay plays in Alberta, is pleased to provide an update on recent developments, including a proposed name change to “Hammerhead Resources Inc.”, pending shareholder approval.

Enhanced Financial Flexibility

The Company has successfully secured a C$150 million equity commitment at C$3.65 per share from an affiliate of its largest shareholder, Riverstone Holdings LLC (“Riverstone”). This equity will be used to further develop the Company’s large high-quality Montney resource base.

On July 10, 2017 the Company issued US$160 million (C$208 million) of 9% senior notes due 2022. The senior notes are unsecured and have an early redemption feature commencing 18 months from the date of issuance. The debt investors include funds sub-advised by GSO Capital Partners and advised by FS Investments, funds and accounts under management by BlackRock Advisors LLC., and funds and accounts under management by Kayne Anderson Capital. A portion of the proceeds were used to redeem the Company’s existing C$85 million 11% secured second lien term loan and to repay borrowings under the Company’s credit facility. The remaining proceeds will be used for general corporate purposes. Credit Suisse acted as sole placement agent for the debt issuance.

The equity commitment, the new senior notes, and the Company’s C$175 million syndicated credit facility considerably strengthen the Company’s balance sheet, providing increased financial flexibility for the Company to continue an active drilling program in pursuit of significant organic growth.

Expanding Growth Opportunities through Acquisitions and the Drill Bit

Over the last 14 months, the Company has complemented its asset base through the successful completion of nine asset acquisitions and/or asset exchanges (the “Acquisitions”). The acquired assets expand the Company’s existing large, contiguous asset base. The Acquisitions comprise approximately 50,000 net acres of primarily undeveloped land with minimal production volumes but meaningful associated reserves and up to 450 additional drilling locations. The reserves were acquired at an attractive metric of C$2.34/boe of proved plus probable (“2P”) reserves, contributing to a threefold year-over-year increase in the Company’s pro forma 2P reserves to 268 MMboe as at December 31, 2016. The Company’s land base now totals over 200,000 net acres of contiguous Montney rights, and its internally identified inventory has increased to nearly 3,000 well locations within the Montney and Duvernay formations.

As a result of CIOC’s operational success to date, the Acquisitions, and a stronger financial position, the Company has increased its 2017 annual average production target to 20,000 – 22,000 boe/d, which is a 55 – 60% increase from 2016. In addition, a third-party midstream plant through which the Company processes the majority of its gas is currently undergoing an expansion to 180 MMcf/d of processing capacity.

“We are encouraged by our operational results, positioning CIOC to be a leading Montney light oil producer,” said Scott Sobie, President and CEO of the Company. “The expansive and profitable nature of this unconventional resource play provided us an opportunity to position the balance sheet to continue with a reasonable program in spite of a challenging market environment. The continued support from Riverstone re-affirms the strength of our relationship along with their high level of confidence in the value of our assets.”

Executive Addition

CIOC is also pleased to announce the appointment of Robert Waters as Senior Vice President and Chief Financial Officer effective February 2017.

Mr. Waters has over 30 years of oil and gas industry experience, including 19 years as a CFO at companies such as Enerplus, Pengrowth and OMERS Energy. Mr. Waters brings extensive experience with equity and debt capital markets in both Canada and the U.S., as well as strategic planning, A&D, and support functions such as Information Systems, HR and investor relations. He is a Chartered Accountant with a BBA and MBA from York University School of Business.

Proposed Name Change to Hammerhead Resources

The Company believes it has outlived its current name and intends to propose a name change to “Hammerhead Resources Inc.” at its next shareholder meeting. Hammerhead Resources is inspired by the shape of a river system in one of our prolific areas commonly known as the hammerhead. This rebranding improves the alignment between the Company’s identity and its assets, while eliminating any potential confusion around its geographic focus.

About CIOC

CIOC is a growth-oriented private company with a large, contiguous land base in the heart of two of the most prolific resource plays in North America, with over 200,000 net acres in each of the Montney and Duvernay formations. The Company’s development has been focused on the Upper/Middle Montney, where delineation activity has proven the repeatability of the laterally continuous light oil-rich fairway. The Company’s first horizontal Duvernay well has performed at the top decile of Duvernay liquids producers in the area, establishing the play extension of the prolific Kaybob fairway to the west. The Company’s key financial partners include Riverstone Holdings LLC and 1901 Partners (formerly ZBI Ventures).

About Riverstone Holdings LLC

Riverstone is an energy and power-focused private investment firm founded in 2000 by David M. Leuschen and Pierre F. Lapeyre, Jr. with over US$36 billion of capital raised. Riverstone conducts buyout and growth capital investments in the E&P, midstream, oilfield services, power, and renewable sectors of the energy industry. With offices in New York, London, Houston, and Mexico City, Riverstone has committed over US$35 billion to more than 130 investments in North America, South America, Europe, Africa, Asia, and Australia.