CALGARY, ALBERTA–(Marketwired – Oct. 17, 2016) – Chinook Energy Inc. (TSX:CKE) (“Chinook” or the “Company“) announced today that it will undertake a plan of arrangement (the “Arrangement“) under the Business Corporations Act (Alberta) to effect the distribution of all of the common shares (the “Craft Shares“) of Craft Oil Ltd. (“Craft“) (formerly, Tournament Exploration Ltd.) acquired by Chinook pursuant to the asset divestiture to Craft announced on June 13, 2016. Pursuant to the Arrangement, a new class of class “A” common shares of Chinook (the “New Chinook Shares“) will be created and each currently issued and outstanding common share (the “Chinook Shares“) of Chinook will then be exchanged for one (1) New Chinook Share and a portion of the Craft Shares received in the asset disposition. Based on the 216,442,834 Chinook Shares issued and outstanding as at the date hereof (on a non-diluted basis), holders of Chinook Shares shall be entitled to receive one (1) New Chinook Share and approximately 0.7034 of a Craft Share, for each Chinook Share held at the time the Arrangement is completed. The final exact allocation of the Craft Shares will be determined at the time the Arrangement is completed based on the number of Chinook Shares then issued and outstanding.
Chinook has called a special meeting (the “Meeting“) of the shareholders of Chinook to be held at 9:00 a.m. on December 12, 2016. At the Meeting, shareholders of Chinook will be asked to consider and vote upon the Arrangement. The Board of Directors of Chinook unanimously recommends that shareholders of Chinook vote their Chinook Shares in favour of the Arrangement. Further details on the proposed Arrangement, including relevant Canadian federal income tax information, will be included in an information circular and proxy statement which is expected to be mailed in mid-November 2016 to the shareholders of Chinook.
The Arrangement is being completed independent of the Company’s strategic review process announced on August 2, 2016, which process is ongoing. The Company does not intend to provide further updates on its strategic review process until such time as the Company determines is appropriate. There can be no guarantee that the strategic review will result in a transaction, or if a transaction is undertaken, as to its terms or timing.
Chinook also announced today that Craft, an approximate 70% owned subsidiary of Chinook, has entered into a purchase and sale agreement to sell certain Alberta properties with production of approximately 1,934 barrels of oil equivalent per day (“boepd“) (68% gas) for gross proceeds of $13.5 million, comprised of $9.0 million cash and $4.5 million of tradeable debentures (the “Asset Disposition“). Craft anticipates that the Asset Disposition will occur on October 27, 2016 upon satisfaction of all conditions precedent thereto. Craft executed the purchase and sale agreement as part of a plan to reduce the number of its non-core properties and to focus on its core area of Grand Prairie, Alberta.
Upon closing of the Asset Disposition, Craft will have the following characteristics:
- production of approximately 2,400 boepd (69% gas);
- 83% of production focused in Craft’s Grand Prairie, Alberta core area;
- net debt of less than $6.0 million (excluding tradeable debentures mentioned above); and
- approximately 217 million common shares outstanding (approximately 253 million fully diluted).
About Chinook Energy Inc.
Chinook is a Calgary-based public oil and natural gas exploration and development company with multi-zone conventional production and resource plays in western Canada.