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Birchcliff abandons sales process
Gary Park For Petroleum News
The rollercoaster existence of natural gas-weighted Birchcliff Energy has seen the Canadian intermediate producer rise and fall on the same day as it announced the termination of a corporate sale process.
The company, which put itself up for sale in October and reported on March 14 that negotiations were “ongoing” while cautioning there was no assurance of “successful transaction,” issued a release March 29 disclosing that it has not received an acceptable offer reflecting the value of the company.
Instead, Birchcliff effectively turned to business as usual, reporting it had entered into a bought deal equity financing and a private placement for combined aggregate gross proceeds of C$110 million.
It also set a capital budget for 2012 of C$292.2 million and estimated it will exit 2012 with production at 26,000 barrels of oil equivalent per day, up from current output of about 21,100 boe per day.
Company president and chief executive officer Jeff Tonken said in a prepared statement that Birchcliff’s board of directors “turned down one verbal non-binding offer and one written non-binding offer” during the sales process.
He told the Calgary Herald the bidders were “international plays,” not local gas companies, which he said “have no money left.”
Price decline an issue Based on the decline in natural gas prices and the decline in share values of its peers, Birchcliff decided “continued negotiations would not result in a proposal that would reflect the long-term value” of its assets, he said.
The company received one vote of confidence from Seymour Schulich, a billionaire mining and resources executive who holds 26 percent of Birchcliff shares and who announced he will buy 5 million additional shares at C$7.65 each in a private placement for C$38 million.
He said the sale of the company “at the bottom of the commodity price cycle will not achieve an appropriate value for Birchcliff’s shareholders.”
The company also expects to raise gross C$71.9 million through a bought deal issue of 8 million shares, due to close April 19, plus an issue of 1.1 million flow-through shares at C$9.20 each. The proceeds from the flow-through shares must be spent on exploration and development and offer tax benefits to buyers.
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