In Calgary, Provident Energy to acquire Richland Petroleum

Nov. 27, 2001
Provident Energy Trust has agreed to acquire Richland Petroleum Corp. in a $190 million (Can.) transaction. Both entities are based in Calgary. Provident will trade 0.4 shares per Richland unit, worth about $3.82/share.

By the OGJ Online Staff

HOUSTON, Nov. 27 -- Provident Energy Trust has agreed to acquire Richland Petroleum Corp. in a $190 million (Can.) transaction.

Both entities are based in Calgary. Provident will trade 0.4 shares per Richland unit, worth about $3.82/share.

Richland shareholders will also receive, for each share of Richland, one share of a newly incorporated company (dubbed Newco) which will hold Alberta exploration and development properties, including 88,000 net acres of undeveloped land and production of 200 boe/d.

Richland shareholders will meet to vote on the plan in mid to late January. Directors of both companies have approved the transaction.

Holders of 33% of Richland have agreed to vote their shares in favor of the plan.

Provident's production will rise to approximately 17,000 boe/d comprised of 38% natural gas, 35% heavy oil, and 27% light oil and natural gas liquids. Provident's reserve base increases to 40 million boe of proven reserves.

Provident has also agreed to sell 4 million trust units for $8.75 each on a bought deal basis to a syndicate of underwriters led by Scotia Capital & National Bank Financial Inc.

The net proceeds will reduce debt related to the acquisition of Richland. If the arrangement is not completed, the proceeds will fund future acquisitions, capital expenditures, and general corporate purposes.

The total number of Provident units outstanding will increase to 32.4 million from 17 million, including the issuance of units pursuant to the bought deal financing. Total pro forma capitalization will be $420 million.