LOGAN ENERGY CORP. ANNOUNCES STRATEGIC MONTNEY ASSET ACQUISITION, $35 MILLION EQUITY OFFERING AND PRO FORMA GUIDANCE FOR THE REMAINDER OF 2024 AND 2025

2024-11-26

TSXV - TSX Venture Exchange · Oil · Natural Gas · Canada

Canada NewsWire

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES . ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW./

CALGARY, AB , Nov. 26, 2024 /CNW/ - Logan Energy Corp. (TSXV: LGN) (" Logan " or the " Company ") is pleased to announce that it has entered into a definitive agreement today to acquire an operated 50% working interest in certain assets located in the Company's core area at Simonette, Alberta , for a cash purchase price of $52.0 million , before closing adjustments (the " Acquisition ").

Logan is also pleased to announce an equity financing to be offered on a bought deal, private placement basis, led by National Bank Financial Inc. and Eight Capital as joint bookrunners and co-lead underwriters, for aggregate gross proceeds of $35.0 million (the " Equity Offering ").

ACQUISITION HIGHLIGHTS

Logan has entered into an asset purchase agreement with a subsidiary of Gran Tierra Energy Inc., a publicly-traded oil and gas company (the " Vendor "), pursuant to which the Company will acquire an operated 50% working interest in certain assets in the Simonette area, primarily targeting the Montney , and 100% of the Vendor's interest in certain Simonette gross overriding royalties (the " GORRs ") (collectively, the " Acquired Interest ") for cash consideration of $52.0 million , before closing adjustments. The Acquisition has an effective date of September 1, 2024 , and is expected to close on or around December 17, 2024 , subject to the satisfaction or waiver of customary closing conditions.

The Acquisition includes current production of approximately 795 BOE/d (48% liquids), 25 net (52.5 gross) sections of highly prospective Montney acreage including 45 net identified Montney drilling locations, 16 gross 5-10% GORR sections, and interests in important infrastructure including a 50% working interest in a 9 million barrel water reservoir and an oil battery at 06-09-061-27W5.

The Acquisition augments Logan's long term organic growth plan and is consistent with its stated strategy. Pro forma the Acquisition, Logan plans to achieve production growth to between 24,000 to 27,000 BOE per day by 2028, up from its previously stated target of 20,000 to 25,000 BOE per day by 2028. The high-quality oil weighted inventory being acquired is accretive to Logan's inventory and drives compelling full cycle returns on the Acquisition.

VALUE PROPOSITION AND ACCRETION

2025 accretion of 11% to AFF per share (moderated by cycle time to add production) 2026-2029 accretion of 13-18% to AFF per share relative to Logan on a standalone basis Top tier Montney oil drilling locations add to Logan's inventory depth and provide torque to strong crude oil prices; South Simonette Lower Montney TPP forecast type curve of 520 mbbl of oil expected to deliver a NPV of approximately $14 million discounted at 10% before-tax 1 Removes 5-10% GORRs from 38 of Logan's net Montney locations, improving project economics Two-layer co-development of Lower and Middle Montney improves capital efficiencies and reduces proportionate infrastructure spending The strong synergies with Logan's existing owned gathering and processing will result in operating cost savings of over $7.5 million in the first five years of development on the acquired assets Eliminates approximately $13.0 million in near-term infrastructure capital from Logan's current five-year plan Expected to improve Logan's realized pricing due to the increase in liquids weighting, while maintaining Logan's long term cost structure (operating expenses are forecast to be less than $8.00 /BOE by 2027)

| | | 1 Based on the Vendor's 2023 Reserve Evaluation (defined herein) and the 3 consultant average price forecast at December 31, 2023. |

[](https://mma.prnewswire.com/media/2567967/Logan_Energy_CorpLOGAN_ENERGY_CORPANNOUNCES_STRATEGIC_MONTNE.html)

ACQUISITION METRICS

Notes: Refer to "Reader Advisories".

EQUITY OFFERING

Logan has entered into an agreement with a syndicate of underwriters (the " Underwriters ") led by National Bank Financial Inc. and Eight Capital as joint bookrunners and co-lead underwriters (the " Lead Underwriters "), pursuant to which the Underwriters have agreed to purchase for resale on a private placement, bought deal basis, 47,946,000 common shares (" Common Shares ") at a price of $0.73 per Common Share for aggregate gross proceeds of approximately $35.0 million . It is anticipated that certain directors, officers and employees of the Company will subscribe for approximately $2.8 million of the Equity Offering.

Closing of the Equity Offering will be conditional on the completion of the Acquisition. Logan intends to use the net proceeds from the Equity Offering to repay indebtedness incurred to fund a portion of the purchase price for the Acquisition. The completion of the Equity Offering is subject to customary closing conditions, including the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange (" TSXV "). Closing of the Equity Offering is expected to occur immediately following the Acquisition, on or around December 17, 2024 . The Company has agreed to pay a cash commission of 4.0% of the gross proceeds of the Equity Offering to the Underwriters, except with respect to subscribers to be included on the president's list for which no commission will be paid.

The Common Shares will be subject to a statutory hold period that extends four months from the Closing Date; provided that any Common Shares issued in the United States will be subject to a 1 year hold period, subject to the ability to resell the Common Shares on the TSXV prior to 1 year in accordance with U.S. securities laws.

ADVISORS

National Bank Financial Inc. and Eight Capital are acting as financial advisors to Logan in respect of the Acquisition and the Equity Offering.

Stikeman Elliott LLP is acting as legal counsel to Logan in respect of the Acquisition and the Equity Offering.

Burnet, Duckworth & Palmer LLP is acting as legal counsel to the underwriters in respect of the Equity Offering.

PRO FORMA 2024 GUIDANCE

Logan has updated its guidance for 2024 to reflect the Acquisition and Equity Offering, including an expanded budget for Capital Expenditures before A&D of $157 million (previously $140 million ). Additionally, the Company has reduced its average production guidance for 2024 by 3% to approximately 8,400 BOE/d (previously 8,700 BOE/d) due to voluntary shut-ins of uneconomic natural gas production, deferral of certain production optimization projects until gas prices recover, and delayed onstream and intermittent run time from the Company's exploratory well at Lator. Despite lower production and weaker natural gas prices for the second half of 2024 than previously forecast, Logan's guidance for 2024 Adjusted Funds Flow of approximately $52 million is unchanged from previous guidance due to lower cash costs. Assuming a closing date of December 17, 2024 , the Acquisition will have a minimal contribution to 2024 average production and Adjusted Funds Flow.

The increase in the capital expenditure budget primarily includes acceleration of projects originally planned for the first quarter of 2025 into the fourth quarter 2024, including one drill and two completions at Simonette and commencing construction for the Pouce Coupe Infrastructure ahead of schedule, to level load activity in preparation for a further expanded 2025 development program pro forma the Acquisition. Additionally, the expanded 2024 budget includes pad construction and drilling of the first joint well in the Lower Montney on the acquired assets.

| For the year ending December 31, 2024 | Previous Guidance | Updated Guidance | Change | % | | Average production (BOE/d) (1) | 8,700 | 8,400 | (300) | (3) | | % Liquids | 34 % | 34 % | 0 % | - | | Forecast Average Commodity Prices | | | | | | WTI crude oil price (US$/bbl) | 75.67 | 75.67 | - | - | | AECO natural gas price ($/GJ) | 1.48 | 1.37 | (0.11) | (7) | | Average exchange rate (CA$/US$) | 1.36 | 1.36 | - | - | | Operating Netback, after hedging ($/BOE) (1)(2) | 18.40 | 19.04 | 0.64 | 3 | | Adjusted Funds Flow ($MM) (1)(2) | 52 | 52 | - | - | | AFF per share, basic (2)(4) | 0.11 | 0.11 | - | - | | Capital Expenditures before A&D ($MM) (2) | 140 | 157 | 17 | 12 | | Acquisitions (3) | - | 63 | 63 | nm | | Net Debt (Surplus), end of year ($MM) (2) | (1) | 47 | 48 | nm | | Common shares outstanding, end of year (MM) (4) | 534 | 582 | 48 | 9 |

| (1) | Additional information regarding the assumptions used in the forecasts of average production, Operating Netback and Adjusted Funds Flow are provided under "Reader Advisories" below. | | (2) | "Operating Netback, after hedging", "Adjusted Funds Flow", "AFF per share", "Capital Expenditures before A&D" and "Net Debt (Surplus)" do not have standardized meanings under IFRS Accounting Standards, see "Non-GAAP Measures and Ratios" section of this press release. | | (3) | Includes the $52.0 million purchase price for the Acquisition plus $8.1 million of estimated closing adjustments plus an assumed liability of $2.7 million estimated to carry the Vendor's share of the first Simonette drill. | | (4) | The forecast of basic Common Shares outstanding assumes closing of the Equity Offering for aggregate gross proceeds of $35.0 million. AFF per share is based on the estimated basic weighted average common shares outstanding during the year. Refer to additional information regarding outstanding dilutive securities under the heading of "Share Capital" in this press release. |

PRO FORMA 2025 BUDGET

Logan is pleased to provide details of its pro forma budget for 2025, which is focused on delivering material liquids growth through accelerated development at Pouce Coupe together with an expanded program at Simonette pro forma the Acquisition. Additionally, the Company will continue to advance its positions in the Alberta Duvernay and at Flatrock, British Columbia , invest heavily in infrastructure and reserve capital for additional land capture opportunities. The pro forma capital expenditure budget of $195 million includes approximately $35 million directed to the acquired assets. The 2025 capital expenditure budget remains elevated relative to other years within Logan's five year plan due to the one-time Pouce Coupe infrastructure costs (details of the Pouce Coupe infrastructure project are provided in the Company's press release dated September 12, 2024 ).

In addition to constructing and commissioning the Pouce Coupe infrastructure, the Company plans to bring on production nine net wells at Pouce Coupe , five net wells at Simonette, and one well at Ante Creek driving 2025 average production of approximately 13,650 BOE per day (additional information regarding all drilling activity is provided under the heading "Reader Advisories – Assumptions for Guidance – Planned Activity").

The pro forma 2025 budget delivers (from 2024E to 2025E):

63% average production growth (62% per share); 91% oil and condensate growth; 20% decrease in average per unit operating and transportation costs; 131% Adjusted Funds Flow growth; and 91% Adjusted Funds Flow per share growth after giving effect to the Equity Offering.

The Company's pro forma guidance for 2025 after giving effect to the Acquisition and Equity Financing is summarized as follows:

| For the year ending December 31, 2025 | 2025 Preliminary Budget | 2025 Pro Forma Budget | Change | % | | 2025 average production (BOE/d) (1) | 12,800 | 13,650 | 850 | 7 | | % Liquids | 37 % | 40 % | 3 % | 8 | | H2 2025 average production (BOE/d) (1) | 14,500 | 15,750 | 1,250 | 9 | | % Liquids | 38 % | 42 % | 4 % | 11 | | Forecast Average Commodity Prices (2)(4) | | | | | | WTI crude oil price (US$/bbl) | 70.00 | 70.00 | - | - | | AECO natural gas price ($/GJ) | 2.50 | 2.50 | - | - | | Average exchange rate (CA$/US$) | 1.35 | 1.35 | - | - | | Operating Netback, after hedging ($/BOE) (1)(3)(4) | 25.92 | 27.80 | 1.88 | 7 | | Adjusted Funds Flow ($MM) (1)(3) | 103 | 120 | 17 | 17 | | AFF per share, basic (3) | 0.19 | 0.21 | 0.02 | 11 | | Capital Expenditures before A&D ($MM) (3) | 170 | 195 | 25 | 15 | | Net Debt, end of year ($MM) (3) | 66 | 122 | 56 | 85 | | Common shares outstanding, end of year (MM) (5) | 534 | 582 | 48 | 9 |

| (1) | Additional information regarding the assumptions used in the forecasts of average production, Operating Netback and Adjusted Funds Flow are provided under "Reader Advisories" below. | | (2) | Forecast natural gas prices have decreased since announcing the Company's preliminary 2025 budget in September 2024. For purposes of comparing pro forma guidance with the Acquisition to Logan's stand alone plan, we have held commodity price assumptions constant. Refer to commodity price sensitivities under the heading of "Reader Advisories". | | (3) | "Operating Netback, after hedging", "Adjusted Funds Flow", "AFF per share", "Capital Expenditures before A&D" and "Net Debt" do not have standardized meanings under IFRS Accounting Standards, see "Non-GAAP Measures and Ratios" section of this press release. | | (4) | A summary of outstanding commodity price risk management contracts is provided under the heading "Reader Advisories - Assumptions for Guidance – Commodity Hedging". | | (5) | The forecast of basic Common Shares outstanding assumes closing of the Equity Offering. AFF per share is based on the estimated basic weighted average common shares outstanding during the year. Refer to additional information regarding outstanding dilutive securities under the heading of "Share Capital" in this press release. |

ABOUT LOGAN ENERGY CORP.

Logan is a growth-oriented exploration, development and production company formed through the spin-out of the early stage Montney assets of Spartan Delta Corp. Logan was founded with a strong initial capitalization and three high quality and opportunity rich Montney assets located in the Simonette and Pouce Coupe areas of northwest Alberta and the Flatrock area of northeastern British Columbia and has recently established a position within the greater Kaybob Duvernay oil play with assets in the North Simonette, Ante Creek and Two Creeks areas. The management team brings proven leadership and a track record of generating excess returns in various business cycles.

READER ADVISORIES

Notes to Acquisition Metrics table :

| 1) | The purchase price to be paid by Logan in respect of the Acquisition is $52.0 million in cash, before closing adjustments. The Company expects purchase price adjustments, which include estimated cash flows, capital expenditures, and interest between the effective date of September 1, 2024 and closing to be approximately $8.1 million in favour of the Vendor due to recent drilling activity. Additionally, Logan has agreed to carry the Vendor's share of the first Simonette drill at an estimated cost of $2.7 million. Total consideration inclusive of closing adjustments and the drill carry is estimated to be approximately $62.8 million. | | 2) | Average production for the third quarter of 2024 from the Acquired Interest was approximately 795 BOE/d, consisting of 325 bbl/d of oil (41%), 60 bbl/d of NGLs (7%), and 2,460 mcf/d of natural gas (52%). | | 3) | Average production forecast for 2025 is approximately 1,440 BOE/d, consisting of 725 bbl/d of oil (50%), 65 bbl/d of NGLs (5%), and 3.9 mmcf/d of natural gas (45%). | | 4) | 2025 Operating Netback and Operating Income forecast based on commodity price assumptions of US$70/bbl WTI and $2.50/GJ AECO. Operating Income and Operating Netback are non-GAAP measures. See " _Non-GAAP Measures and Ratios _" for additional details. | | 5) | Of the 99 gross (45 net) identified Montney locations, there are 45 gross (22.5 net) booked locations in the Vendor's 2023 Reserve Evaluation (defined below) with an additional 54 gross (22.5 net) of unbooked locations identified by Logan. See " _Drilling Locations _" for additional details. | | 6) | Proved developed producing reserves (" PDP ") and total proved plus probable reserves (" TPP ") are based on the Vendor's 2023 Reserve Evaluation. Reserves volumes and values are based on working interest reserves of the Acquired Interest before deduction of royalties and without including any of royalty interest reserves. See " _Reserves Disclosure _" for additional details. | | 7) | PDP consisting of 322 MMbbl of crude oil (34%), 102 MMbbl of NGLs (11%), and 3,057 MMcf of natural gas (55%). | | 8) | Reserve life index (" RLI ") is calculated by dividing PDP or TPP, as applicable, by estimated current production of the Acquired Interest of 795 BOE/d. See note (2) for a breakdown of estimated current production from the Acquired Interest by product type and note (6) for further information regarding reserves estimates. | | 9) | TPP consisting of 8,926 MMbbl of oil (64%), 806 MMbbl of NGLs (6%), and 25,354 MMcf of natural gas (30%). | | 10) | Future development capital of $568.2 million gross ($284.1 million net) are attributable to the Acquired Interest and represents expectations for the remainder of the booked reserves life of 5 years (2024-2028), per the TPP case in the Vendor's 2023 Reserve Evaluation. | | 11) | Decommissioning obligations for the Acquired Interest of approximately $6.0 million (undiscounted and uninflated) are internally estimated by Logan based on AER Directive 11 updates effective June 26, 2024 as well as internal estimate of reclamation costs and site specific information. |

Non-GAAP Measures and Ratios

This press release contains certain financial measures and ratios which do not have standardized meanings prescribed by International Financial Reporting Standards as issued by the International Accounting Standards Board (" IFRS Accounting Standards "), also known as Canadian Generally Accepted Accounting Principles (" GAAP "). As these non-GAAP financial measures and ratios are commonly used in the oil and gas industry, Logan believes that their inclusion is useful to investors. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used.

The non-GAAP measures and ratios used in this press release, represented by the capitalized and defined terms outlined below, are used by Logan as key measures of financial performance and are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, net income or other measures of financial performance calculated in accordance with IFRS Accounting Standards.

The definitions below should be read in conjunction with the "Non-GAAP and Other Financial Measures" section of the Company's MD&A dated November 13, 2024 , which includes discussion of the purpose and composition of the specified financial measures and detailed reconciliations to the most directly comparable GAAP financial measures.

Operating Income and Operating Netback

Operating Income, a non-GAAP financial measure, is a useful supplemental measure that provides an indication of the Company's ability to generate cash from field operations, prior to administrative overhead, financing and other business expenses. " Operating Income, before hedging " is calculated by Logan as oil and gas sales, net of royalties, plus processing and other revenue, less operating and transportation expenses. " Operating Income, after hedging " is calculated by adjusting Operating Income, before hedging for realized gains or losses on derivative financial instruments.