Thunder Energy Inc., Mustang Resources Inc. and Forte Resources Inc., three Calgary-based producers, on Tuesday announced plans to consolidate their assets into a trust that will have a total 31.5 MMboe of proved reserves, 13,000 boe/d of production and a value of about C$1 billion.
If approved, the new Thunder Trust will be divided up into two exploration-focused producers (Thunder Explorco and Forte Explorco) and a resource-based coal bed methane company (Thunder CBMco). The companies said the reorganization is designed to enhance value for shareholders by combining mature producing assets to create a larger, more diversified production base capable of maintaining sustainable distributions for the trust.
The trust will own 86% of the combined assets of Thunder, Mustang and Forte. The assets of Thunder Trust are expected to produce an average of 13,000 boe/d in the second half of 2005 including of 50 MMcf/d of natural gas and 4,700 b/d of crude oil and natural gas liquids.
"This transaction creates ownership by Forte shareholders in a trust with a diversified asset base and balance between oil and gas production," said Tom MacKay, CEO of Forte Resources. "In addition, the Forte Explorco will provide Forte shareholders with an opportunity to participate in an exciting growth story with an exploration focus in significant oil and gas prospects in west central Alberta, N.E.B.C. and the Peace River Arch."
Management of the trust will be composed of executives and management from Thunder and Mustang, led by Doug Dafoe, CEO, Brent Kirkby, CFO, Steve Gell, vice president of Production and Tom Zuorro, vice president of Land. Andy Magee, currently a senior geologist at Mustang, is expected to assume a senior management position in the trust. Additional senior management positions will be added to the trust. The initial board of trustees of the trust will be composed of certain of the current directors of Thunder, two nominees from Mustang and one nominee from Forte.
Going by independent engineering reports conducted on Jan. 1, the trust will have proven reserves of 31.5 MMboe and proved plus probable reserves of 45 MMboe, 70% weighted to natural gas. Assuming estimated production of 13,000 boe/d, this results in a reserve life index of 6.6 years for proven reserves and 9.5 years for proven plus probable reserves.
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