Prairie Provident Announces Closing of Marquee Energy Ltd. Acquisition

CALGARY, Alberta, Nov. 21, 2018 (GLOBE NEWSWIRE) — Prairie Provident Resources Inc. (“Prairie Provident” or “PPR” or the “Company”) (TSX:PPR) and Marquee Energy Ltd. (“Marquee”) (TSXV:MQX) announce that the Company’s previously-disclosed acquisition of Marquee by plan of arrangement under section 193 of the Business Corporations Act (Alberta) (the “Arrangement”), which was approved by approximately 98% of the votes cast by Marquee shareholders at a special meeting held to consider the transaction, and subsequently approved by the Court of Queen’s Bench of Alberta, has now closed.  Pursuant to implementation of the Arrangement today, Prairie Provident acquired all of the outstanding Marquee shares on a share exchange basis, with Marquee shareholders receiving an aggregate of 38,609,416 common shares based on an exchange ratio of 0.0886 common shares of the Company for each Marquee share held.

With the Arrangement closing, Prairie Provident is positioned as a growth-oriented oil and gas company offering numerous strategic benefits for shareholders which include:

• An enlarged asset base focused in three core areas including Michichi/Wayne, Princess and Evi, all of which offer light oil exposure and greater capital allocation alternatives, operatorship of over 90% and an average working interest exceeding 98% in the core areas.
• Pro forma corporate production will be approximately 7,700 boe/d (67% oil and liquids), compared to an average of 5,776 boe/day in Q3, 2018.
• An expanded oil-weighted growth profile which offers superior economies of scale, lower risk development drilling opportunities and a proven water flood program that enhances reserves, extends reserve life index and lowers overall corporate decline rates.
• A stronger financial position which facilitates the funding of Prairie Provident’s deep inventory of highly-attractive drilling prospects in the Michichi area of Alberta over the near and longer term, and the ability to benefit from potentially improved marketplace liquidity and future consolidation prospects.
• Synergies and general and administrative cost savings from consolidation, as well as the addition of a pipeline-connected 2,000 barrels of oil per day (bopd) central oil battery, and two gas plants and associated gas gathering infrastructure with 15 MMcf/d of combined processing capacity.
• Increased estimated proved reserves by approximately 97% to 28.3 MMboe, with an increase in net present value of estimated future net revenues therefrom (before taxes and discounted at 10% per year) (“NPV10 BT”) of approximately 74% to $361.6 million.  Increased estimated proved plus probable reserves by approximately 110% to 43.3 MMboe, with NPV10 BT therefrom increasing by approximately 88% to $560.7 million.¹

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1 Based on the respective reserves evaluation reports of Prairie Provident and Marquee, prepared by Sproule Associates Ltd., evaluating the reserves data of each company as of December 31, 2017 in accordance with the requirements of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities, prior to adjusting for anticipated non-core asset dispositions.}

Expansion of Prairie Provident’s existing credit arrangements

In connection with closing the Arrangement, the Company’s wholly-owned subsidiary, Prairie Provident Resources Canada Ltd. (“PPR Canada”), expanded its existing credit arrangements with Prudential Capital Group (“Prudential”) which includes an increase in its Revolving Note Facility from US$45 million to US$65 million and the issue of an additional US$12.5 million principal amount of Subordinated Notes.  Borrowings under the expanded credit facility have been applied, in part, to finance repayment of Marquee’s indebtedness (including the Crown term loan).

Release of escrowed proceeds from subscription receipt financing

In October 2018, PPR completed an equity financing that included a ‘bought deal’ prospectus offering of 6,810,200 subscription receipts and a concurrent private placement of an additional 2,780,000 subscription receipts, all at a price of $0.39 per unit. Each subscription receipt entitles the holder to receive, in connection with completion of the Arrangement, for no additional consideration, one PPR common share and one-half of one common share purchase warrant.  Each whole warrant will entitle the holder to subscribe for and purchase one PPR share at an exercise price of $0.50 until October 11, 2020 (subject to adjustment in certain circumstances).

The proceeds from the sale of the subscription receipts were deposited in escrow on closing of the financing, and released to Prairie Provident upon closing of the Arrangement today.

ABOUT PRAIRIE PROVIDENT

Prairie Provident is a Calgary-based company engaged in the exploration and development of oil and natural gas properties in Alberta.  The Company’s strategy is to grow organically in combination with accretive acquisitions of conventional oil prospects, which can be efficiently developed. Prairie Provident’s operations are primarily focused at Wheatland and Princess in Southern Alberta targeting the Ellerslie and the Lithic Glauconite formations, along with an early stage waterflood project at Evi in the Peace River Arch. Prairie Provident protects its balance sheet through an active hedging program and manages risk by allocating capital to opportunities offering maximum shareholder returns.