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Paramount sets Mackenzie spin-off terms
Shareholders of Paramount Resources will get a front-line opportunity to participate in northern oil and gas exploration when the Canadian independent spins off its Northwest Territories assets.
Under a plan of arrangement announced Dec. 11, the investors will get one share of the new Arctic company and five warrants for every 25 Paramount shares they hold.
The deal will be voted on by the shareholders on Jan. 11, with the spinout expected to be in place the next day.
Paramount will initially own 87 percent of the so-called Newco.
Once in place, the publicly traded company will own rights under a farm-in agreement Paramount negotiated in September with Chevron Canada and BP Canada Energy covering about 1.019 million gross acres on the Mackenzie Delta and oil and gas properties in the Colville Lake area of the Mackenzie Valley covering 1.483 million gross acres.
Company has drilling plans When it first announced the plan, Paramount said the new company would drill on the Delta lands, where Chevron and BP have recorded some success.
Meanwhile, Paramount will retain its existing producing assets and its undeveloped acreage, which will be run by the existing management team.
The chief executive officer of Newco will be Clayton Riddell, Paramount’s president and chief executive officer.
The proceeds from the exercise of the short and longer term warrants will be used to fund programs under the Delta farm-in, which are expected to be about C$130 million to the end of the 2007-2008 winter drilling season.
—Gary Park
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