Lone Pine Resources

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
$14.0MM
Description

Lone Pine Resources Ltd. plans to sell non-core assets in the Herronton area of Alberta for $14 million in cash to an undisclosed buyer.

Lone Pine Resources Ltd. (NYSE: LPR) plans to sell non-core assets in the Herronton area of Alberta for $14 million in cash to an undisclosed buyer.

Wells Fargo reported the area has averaged net sales volume of 1.7 million cubic feet equivalent (MMcfe) per day, 74% of which is natural gas in fourth quarter 2012. In addition, the region has net proved reserves of 6.7 billion cubic feet equivalent (Bcfe) per day as of yearend 2011.

The deal’s transaction price equates to $8,235 Mcfe per day for flowing production and $2.10 Mcfe for proven reserves.

The deal is expected to close on Feb. 25, and is not expected to change the company’s borrowing base.
Lone Pine will use the money to reduce outstanding debt. The company has previously stated that it expects to generate between $50 million and $100 million from asset sales.

Wells Fargo said it believed the company may sell additional assets and may consider a joint venture with Evi. Wells Fargo said the sale will improve liquidity for the company. It expects total asset sales of around $105 million in the fourth quarter 2012 and first quarter 2013.

“Given our $100 million capex estimate in 2013 and cash flow generation of about $70 million according to our model, based on $90 per barrel and $3.40 per Mcf in 2013, the company is in sufficient liquidity position,” according to Wells Fargo.

Wells Fargo ranks Lone Pine Resources as “Outperform.” Lone Pine Resources is based in Calgary.