ELLORA ENERGY ANNOUNCES SALE OF COMPANY FOR $695M

DENVER, July 20, 2010 /PRNewswire via COMTEX/ --

Ellora Energy today announced the execution of a definitive agreement and plan of merger with an undisclosed buyer.

Under the terms of the agreement, Ellora Energy stockholders will receive base consideration of $695 million in cash, which after adjustment for certain items is expected to result in approximately $13.10-13.35/share on a projected fully diluted share count basis. The transaction is subject to escrow and customary closing conditions, including approval by Ellora's stockholders. Under the terms of the agreement, $35 million will be placed in escrow. Proxy materials are expected to be sent to stockholders within the next 20 days with a stockholder vote anticipated before the end of August.

The Company's year-end 2009 Proved Reserves were 61 Bcfe excluding the properties in Kansas and Colorado that were sold on February 1, 2010, and were 99% gas and 48% Proved Developed. For the quarter ending June 30, 2010, company production was 13.2 MMcfe/d, and the company holds interests in approximately 46,000 net acres in the Haynesville / Bossier plays. In addition, Ellora owns an approximate 100-mile pipeline system in the area. At June 30, 2010, Ellora's estimated net working capital was approximately $125 million and bank debt was $0.

The reserve estimates using SEC guidelines were prepared by the Company's independent reserve engineers, Ryder Scott Company. Mayer Brown LLP has advised the Company as to the legal aspects of the transaction. Tudor, Pickering, Holt & Co. Securities, Inc. has provided a fairness opinion in connection with the merger.

Tags: $695M, ANNOUNCES, COMPANY, ELLORA, ENERGY, FOR, OF, SALE

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Permalink Reply by jffree1 on July 20, 2010 at 13:45
I threw my only suspect into the mix first off. I'll have to go do some looking.
Permalink Reply by jffree1 on July 20, 2010 at 14:02
OK. I'm back with a new suspect or two... after looking at the map Ellora has on their website.

http://www.elloraenergy.com/ops_texas.shtml

I'm now considering both Forest and Goodrich.
Permalink Reply by Skip Peel - Mineral Consultant on July 20, 2010 at 14:17
Quite a submerged leasehold. I suspected the bulk of the 46,000 acres was in TX . Forest would certainly make sense but I guess the question should be, can either Forest or Goodrich make that investment without an equity partner? I don't think so.
Permalink Reply by DJG on July 20, 2010 at 14:28
Looking at Ellora's permitted wells in Shelby, most of their production to date have been in shallower formations in the 9,000-7,000' range. James Lime, Pettet, Huxley, Fredricksburg, etc.

Only 3 or 4 wells permitted have been deeper than 10K'. I guess most of that historical HPB acreage didn't have any depth clause restrictions grandfathered in the old leases.
Permalink Reply by jffree1 on July 20, 2010 at 14:37
I'd hazard to say that until just recently relatively few had a clue that such a thing as a depth clause existed.
Permalink Reply by adubu on July 21, 2010 at 0:46
jfree1--doubt Goodrich could handle any more debt to do this deal, but investment banks do strange things
Permalink Reply by ALongview on July 21, 2010 at 3:20
I think it is Petrohawk. See pg. 15 of presentation and compare "purchase option" area to Ellora;s holdings.

http://www.petrohawk.com/pdf_files/section2.pdf
Permalink Reply by adubu on July 21, 2010 at 3:51
ALongview--think highly probable it is HK with JV EOG
Permalink Reply by The_Baron on July 21, 2010 at 5:17
wouldn't the buyer have to be a private company, and thus not have to disclose this info, I would assume a public company like HK would be forced to make SEC filings.
Permalink Reply by ALongview on July 21, 2010 at 6:14
Baron, no disclosure is due immediately especially since it hasn't been disclosed to Ellora shareholders yet. St. Mary announced a deal with an "undisclosed partner" earlier this year in Shelby and San Augustine Counties that later turned out to be Encana.
Permalink Reply by ken hatcher on July 21, 2010 at 5:30
Not long ago Forest acquired and farmed in 17,000 net acres in Shelby County and Sabine Parish....woud take some deep pockets for this deal.
Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2010 at 10:13
If the buyer is not an equity company, I'm thinking that the sales price is too steep for Petrohawk and most of the shale players including my earlier guess of Encana which just announced a $1B drop in revenue which is causing their stock to take a dive. EXCO is a possibility with partner BG's backing but I'm beginning to lean to XTO/XOM as this would be a relatively small cash deal for the major.

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