Renegade Petroleum Ltd. announces acquisitions, financing and transition to income plus growth dividend paying corporation
Canadian Phoenix Resources Corp. Announces Plan of Arrangement
CALGARY, ALBERTA–(Marketwire – Oct. 29, 2012) –
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Renegade Petroleum Ltd. (“Renegade”) (TSX VENTURE:RPL) is pleased to announce a series of transformational transactions, which transition Renegade into the highest domestic light oil weighted income plus growth dividend paying corporation in the Canadian public markets and pursuant to which Canadian Phoenix shareholders will acquire common shares of Renegade. The Board of Directors of Renegade has conditionally approved an initial monthly dividend of $0.0192 per share ($0.23 annualized) and a forecasted 93.9% all-in payout ratio (“Pro Forma Renegade”). Based on the Bought Deal Offering and the Private Placement price on October 29, 2012 of $2.35, this would provide an annualized yield of 9.8%. The transactions include the following:
- Asset acquisition of 3,600 boe/d of 94% light oil, low decline (18%), high capital efficiency assets within Renegade’s core area of southeast Saskatchewan;
- $70.7 million bought-deal financing of subscription receipts of Renegade (the “Bought Deal Offering”);
- Additional approximately $114.3 million private placement of subscription receipts of Canadian Phoenix Acquisition Corp. (“CPAC”), a newly created wholly-owned subsidiary of Canadian Phoenix Resources Corp. (“Canadian Phoenix”) (the “Private Placement”); and
- Strategic acquisition by Renegade of CPAC, which is expected to hold approximately $75 million in cash plus the escrowed proceeds from the Private Placement immediately prior to closing (the “Arrangement” collectively, the “Transaction”).
In addition, Renegade is pleased to provide a third quarter operational update and revised 2012 guidance reflecting fourth quarter 2012 drilling and capital expenditure changes consistent with the transition into an income plus growth model.
Canadian Phoenix (TSX VENTURE:CXP) is pleased to announce the Arrangement. Pursuant to the Arrangement, through a series of transactions, Canadian Phoenix shareholders will receive Renegade common shares and will also continue to hold shares of Canadian Phoenix.
The Asset Acquisition
Renegade has entered into an asset purchase agreement (“Purchase and Sale Agreement”) with a Canadian senior producer to acquire certain strategic light oil and gas assets (“Acquired Assets”) within its existing southeast Saskatchewan core area for cash consideration of approximately $405 million (net of approximately $15 million in closing adjustments) (the “Asset Acquisition”).
Key attributes of the Asset Acquisition:
- 3,600 boe/d of light oil production (94% light oil) with a stable, long life, low decline (18%) production profile;
- Strong capital efficiencies and top-tier operating netbacks ($45.66/boe) provide significant free cash flow and ideally position Renegade for a sustainable income plus growth dividend model;
- Significant overlap with Renegade’s existing southeast Saskatchewan assets provides Renegade with operational synergies.
- Key members of Renegade’s operational team have had prior experience running the Acquired Assets;
- High working interest (86%) and high operatorship (83%);
- Conservatively booked reserves with proved developed producing reserves representing 81% of total proved reserves and 57% of total proved plus probable reserves;
- Up to 219 km2 of 3D seismic and 599 km of 2D seismic;
- Existing infrastructure, including process facilities, water disposal and storage capacity within Renegade’s core southeast Saskatchewan areas providing operational synergies between Renegade’s current asset base and the acquired asset base; and
- Significant low-risk development inventory of over an expected 240 (gross) low-risk development locations based on current mapping of which only 27 locations are booked.
The Asset Acquisition has the following characteristics:
|Purchase Price (net of adjustments) (1)||$ 405 million|
|Current Production||3,600 boe/d|
|Operating Netbacks (2)||$ 45.66/boe|
|Proven Reserves (3)||13.2 mmboe|
|P+P Reserves (3)||18.3 mmboe|
|P+P NPV10% (3)||$ 488 million|
|Undeveloped Land (net)||15,600 acres|
|Gross Expected Drilling Locations||240 (206.4 net)|
|PDP Reserves / Total Proved Reserves||81%|
|PDP Reserves / Total 2P Reserves||57%|
|Tax Pools (1)||$ 405 million|
(1) Net of closing adjustments estimated at approximately $15 million.
(2) Based on year to date 2012 actual expenditures and assuming a realized price of $81.50/boe.
(3) Based on Sproule Associates Ltd. reserve report as at December 31, 2011, and mechanically updated to August 31, 2012 in accordance with National Instrument 51-101 and the COGE Handbook by a member of Renegade’s management who is a qualified reserves evaluator.
The Asset Acquisition has the following metrics:(1)(2)
|Production ($/boe/d)(3)||$ 111,200 boe/d|
|Proven Reserves ($/boe)||$ 30.80|
|P+P Reserves ($/boe)||$ 21.83|
|Price / P+P NPV10%||82%|
|RLI (3)||14 years|
(1) Purchase price net of undeveloped land at $300/acre, but no value ascribed to seismic.
(2) Based on Sproule Associates Ltd. reserve report as at December 31, 2011, and mechanically updated to August 31, 2012 in accordance with National Instrument 51-101 and the COGE Handbook by a member of Renegade’s management who is a qualified reserves evaluator.
(3) Based on current production of 3,600 boe/d.
The Asset Acquisition is expected to close on or about December 14, 2012, subject to customary conditions and regulatory approvals, including the approval of the TSX Venture Exchange and Competition Act (Canada) approval.
Financing the Asset Acquisition
Renegade will finance the approximately $405 million Asset Acquisition purchase price through the issuance of equity in connection with the Arrangement (as detailed below), the Private Placement (as detailed below) and the Bought Deal Offering (as detailed below) for expected aggregate gross proceeds of up to $260 million. Upon closing, Renegade anticipates its credit facility will increase to approximately $325 million. The remaining $145 million cash payable to the vendor of the Asset Acquisition will be drawn from a new bank facility presently being co-arranged by National Bank and TD Securities with a syndicate of lenders. Renegade anticipates approximately $81 million of availability on its bank facilities at closing.
Upon the execution of the Purchase and Sale Agreement, Renegade paid the Vendor a 10% deposit in the amount of $42 million (the “Deposit”). Pursuant to the terms of the Purchase and Sale Agreement, the Deposit will be credited towards the purchase price upon the completion of the Asset Acquisition.
The Strategic Rationale: Opportunity to Create a Sustainable Model of Income and Light Oil Production Growth
After significant review of Renegade’s pro forma asset base (“Pro Forma Renegade”), Renegade believes the low decline, long life, high netback light oil production and development nature of Pro Forma Renegade is ideally suited to generate sufficient free cash flow to pay stable dividends after funding internally generated annual production growth, initially targeted at 2%, while retaining future flexibility to pay down debt, increase the dividend and/or accelerate production growth.
Management believes the Acquired Assets provide Pro Forma Renegade with all the key criteria to transition to a sustainable income plus growth model:
- 34.8% payout ratio and 93.9% all-in payout ratio;
- Light oil comprising 95% of exit 2012 production;
- Top-decile operating netbacks of approximately $51.97/boe;
- Low corporate declines of 25%; and
- Strong capital efficiencies of $35,000 per boe/d.
Subject to the completion of the Transaction, the Renegade Board of Directors has approved an initial monthly dividend of $0.0192 per share, with the first monthly dividend anticipated to be declared at the end of December, 2012 and paid in January, 2013. Based on the Bought Deal Offering and the Private Placement price on October 29, 2012 of $2.35, this would provide an annualized yield of 9.8%. The dividend, on an annualized basis, would require $46.6 million or 34.8% of Pro Forma Renegade’s estimated 2013 cash flow of approximately $134.0 million (assuming 2013 average realized pricing of CDN $81.50/boe) based on estimated average 2013 production of 8,041 boe/d. Renegade anticipates allocating approximately $79.2 million to capital expenditures while retaining approximately $8.2 million of cash flow to pay down debt, increase the dividend and/or accelerate production growth. Renegade has significant tax pool coverage (approximately $689 million upon closing of the Asset Acquisition) that is anticipated to provide shareholders with a tax efficient yield vehicle. Renegade anticipates implementing a rolling hedging program, initially hedging up to 75% of its 2013 production and up to 60% of its 2014 production, net of royalties.
On a go-forward basis in 2013, Renegade will focus the majority of its capital program in its two core areas of southeast Saskatchewan and the Viking play in west central Saskatchewan with continual potential consolidation opportunities within these core focus areas. In addition, Renegade currently has a number of higher growth potential properties in key industry plays such as the Slave Point oil play, which have significant economic value but are not, at their current stage, ideally suited to an income plus growth model. Renegade remains focused and committed to extracting the full value of these assets for shareholders which potentially includes a more conservative capital budget allocation and/or identifying potential joint venture partners for these high growth properties following the closing of the Asset Acquisition and Arrangement.
Renegade’s 2013 budget and guidance will be formally approved by its Board of Directors upon closing of the Asset Acquisition and Arrangement.
With a combined stable, predictable pro forma base decline of approximately 25%, a forecast go-forward capital efficiency of approximately $35,000 per producing boe/d, strong hedging program and high light oil weighting (95%), Renegade believes Pro Forma Renegade’s cash flow and dividend payments will be both predictable and sustainable going forward. Strong capital efficiencies will be largely driven by Pro Forma Renegade’s extensive low risk conventional light oil asset base in southeast Saskatchewan and Viking light oil resource play in west central Saskatchewan.
Key Attributes of Pro Forma Renegade
- Expected 2012 exit production of approximately 8,000 boe/d (95% light oil);
- 34.8% payout ratio and 93.9% all-in payout ratio;
- Top-decile netbacks of approximately $51.97;
- Low corporate declines of approximately 25%;
- A basic market capitalization of approximately $476 million plus approximately $244 million of net debt at closing for a total enterprise value of approximately $720 million (based on the Bought Deal Offering and Private Placement price);
- Optimal leverage and ample liquidity with approximately $244 of net debt on a bank line of $325 million representing net debt / 2013E Cash Flow of 1.82x;
- Renegade has currently hedged 1,000 bbls/d of 2013 oil production at CDN $102.21/bbl and plans to hedge up to approximately 75% of production (net of royalties) upon closing of the Asset Acquisition;
- Proved reserves of 21.0 mmboe and Proved plus Probable reserves of 30.6 mmboe based on the independent reserve reports as at December 31, 2011 and updated to August 31, 2012 by a member of Renegade’s management who is a qualified reserves evaluator in accordance with National Instrument 51-101, representing an RLI of 10.5 years (based on 2012 exit production of 8,000 boe/d);
- Over 1,000 (gross) expected pro forma drilling locations targeting low-risk Viking and southeast Saskatchewan conventional targets; and
- Tax pools of approximately $689 million.
1. Renegade has entered into an arrangement agreement pursuant to which Renegade will acquire, pursuant to a plan of arrangement, all of the issued and outstanding common shares of CPAC, a wholly owned subsidiary of Canadian Phoenix, which will hold $75 million in cash plus the escrowed proceeds from the Private Placement immediately prior to closing (the “Arrangement”).
The Arrangement is expected to close in mid-December subject to regulatory, Canadian Phoenix shareholder and court approvals. The closing of the Arrangement is subject to the successful completion of both the Private Placement for minimum gross proceeds of approximately $115 million and the Bought Deal Offering. Under the terms of the Arrangement, each Canadian Phoenix shareholder will receive 0.5985 of a Renegade common share. The aggregate number of common shares of Renegade (“Renegade Shares”) to be issued to Canadian Phoenix shareholders shall be approximately 34,090,909 Renegade Shares.
Certain Canadian Phoenix shareholders, including all officers and directors, who collectively beneficially own or exercise control and direction over approximately 35% of Canadian Phoenix’s fully diluted common shares, have agreed to vote in favour of the Arrangement.
2. CPAC expects to enter into a private placement of subscription receipts of CPAC (“CPAC Subscription Receipts”) with certain key institutional investors co-led by GMP Securities L.P. (“GMP”), TD Securities Inc. (“TD”) and Dundee Securities Ltd (“Dundee”). It is expected that 48,619,915 CPAC Subscription Receipts will be subscribed for at a price of $2.35 per CPAC Subscription Receipt (“CPAC Offering Price”) for aggregate gross proceeds of approximately $114.3 million (the “Private Placement”), implying an effective cost of $2.35 per Renegade Share upon closing of the Arrangement based on an exchange ratio of one to one (1:1).
Closing of the Private Placement is expected to occur on or about November 16, 2012, and is subject to customary conditions and regulatory approvals, including the approval of the TSX Venture Exchange.
The gross proceeds from the sale of the CPAC Subscription Receipts will be held in escrow pending the satisfaction of all conditions to the completion of the Arrangement and the Asset Acquisition. If the Arrangement and the Asset Acquisition are completed on or before January 31, 2013, the proceeds will be released to CPAC pursuant to the terms and conditions governing the CPAC Subscription Receipts. If the Arrangement and the Asset Acquisition are not completed on or before January 31, 2013, or the Arrangement Agreement or the Purchase and Sale Agreement is terminated at an earlier time, holders of CPAC Subscription Receipts will receive, for each CPAC Subscription Receipt held, a cash payment equal to CPAC Offering Price and any interest that was earned thereon during the term of the escrow.
Pursuant to the Arrangement, each CPAC Subscription Receipt will be automatically converted into one common share of CPAC (an “Underlying Common Share”) and each Underlying Common Share will be subsequently and automatically exchanged into one (1) Renegade Share.
has entered into a bought deal financing with a syndicate of underwriters co-led by GMP, TD, Dundee and Macquarie (the “Underwriters”) for an offering of 30,104,300 subscription receipts of Renegade (“Renegade Subscription Receipts”) at an issue price of $2.35 per Subscription Receipt (“Renegade Offering Price”), for aggregate gross proceeds of approximately $70.7 million (the “Bought Deal Offering”). Renegade expects to file a prospectus in each of the provinces of Canada (other than Quebec) in connection with the Bought Deal Offering.
Closing of the Bought Deal Offering is expected to occur on or about November 16, 2012 and is subject to customary conditions and regulatory approvals, including the approval of the TSX Venture Exchange. Each Renegade Subscription Receipt will entitle the holder to receive a Renegade Share, without further payment or action on the part of the holder, immediately prior to the closing of the Asset Acquisition.
The gross proceeds from the sale of the Renegade Subscription Receipts will be held in escrow pending the satisfaction of all conditions to the completion of the Arrangement and the Asset Acquisition. If the Arrangement and the Asset Acquisition are completed on or before January 31, 2013, the proceeds will be released to Renegade. If the Arrangement and the Asset Acquisition are not completed on or before January 31, 2013 or the Arrangement or the Purchase and Sale Agreement is terminated at an earlier time, holders of Renegade Subscription Receipts will receive, for each Renegade Subscription Receipt hed, a cash payment equal to the Renegade Offering Price and any interest that was earned thereon during the term of the escrow Renegade Subscription Receipts.
4. Upon closing, Renegade anticipates its credit facility will increase to approximately $325 million. The remaining $145 million cash payable to the vendor of the Asset Acquisition will be drawn from a new bank facility presently being co-arranged by National Bank and TD Securities with a syndicate of lenders. Renegade anticipates approximately $81 million of availability on its bank facilities at closing.
Details of the Arrangement
It is expected that a meeting of Canadian Phoenix shareholders will occur in mid-December to vote on the Arrangement with closing of the Arrangement to occur immediately prior to the closing of the Asset Acquisition. An information circular is expected to be mailed to security holders of Canadian Phoenix in mid-November 2012. To be implemented, the Arrangement must be approved by not less than two-thirds of the votes cast by Canadian Phoenix shareholders, present in person or by proxy, at the Canadian Phoenix shareholders’ meeting called to approve the Arrangement. Completion of the Arrangement will also be subject to the receipt of customary stock exchange, regulatory and court approvals, the absence of any material adverse change in Renegade, and a number of other matters customary in transactions of this nature. The closing of the Arrangement is subject to the successful completion of both the Private Placement for minimum gross proceeds of approximately $115 million and the Bought Deal Offering.
The Arrangement Agreement contains terms and provisions that are customary for a transaction of this nature, and includes a reciprocal non-completion fee in the amount of $2.5 million which is payable by Renegade or Canadian Phoenix to the other, as the case may be, in certain circumstances.
Registered holders of Canadian Phoenix shares entitled to vote at the meeting of Canadian Phoenix shareholders may exercise rights of dissent with respect to their Canadian Phoenix shares. Completion of the Arrangement is subject to the condition in favour of Renegade that holders of Canadian Phoenix shares representing not more than five percent of the Canadian Phoenix shares then outstanding shall have validly exercised, and not withdrawn, their dissent rights.
The Boards of Directors of Renegade and Canadian Phoenix have unanimously approved the Arrangement and the execution of the Arrangement Agreement. The Board of Directors of Canadian Phoenix has determined that the Arrangement is in the best interests of Canadian Phoenix and the Canadian Phoenix shareholders, and has, based upon, among other things, the opinion of Canadian Phoenix’s financial advisor, determined that the Arrangement is fair, from a financial point of view, to Canadian Phoenix shareholders and has resolved to recommend that Canadian Phoenix shareholders vote in favour of the Arrangement.
Financial Advisors and Fairness Opinions
GMP, Macquarie and TD acted as financial advisors to Renegade with respect to the Asset Acquisition. Dundee and First Energy acted as strategic advisors in connection with the Asset Acquisition.
GMP and TD acted as financial advisors to Renegade in connection with the Arrangement.
CIBC World Markets Inc. is acting as exclusive financial advisor to Canadian Phoenix with respect to the Arrangement and has provided the Canadian Phoenix Board of Directors with its verbal opinion that, as of the date hereof and subject to assumptions, limitations and qualifications contained in the opinion and review of final documentation, the consideration to be received by Canadian Phoenix shareholders pursuant to the proposed Arrangement is fair, from an financial point of view, to Canadian Phoenix shareholders.
Renegade Operational Update
Renegade was extremely active through the third quarter on its southeast and west central Saskatchewan asset bases.
- Increased sales volumes to approximately 3,923 boe/d (estimated) in the third quarter of 2012 (96% light oil and NGL’s), representing an increase of 38% from 2,852 boe/d reported in the third quarter of 2011, and an increase of 6% from 3,712 boe/d reported in the second quarter of 2012;
- Achieved a 100 percent success rate drilling 24 gross (20.2 net) wells in the third quarter which includes 14 gross (10.2 net) wells in southeast Saskatchewan and 10 gross (10.0 net) wells in the Viking in west central Saskatchewan;
- Completed construction of the Redvers facility in southeast Saskatchewan which will allow for significant unoptimized production to come on stream in the fourth quarter, which was previously constrained due to capacity;
- Demonstrated further improved production results from Renegade’s Frobisher and Souris Valley trends; and
- Currently hedged 2,000 bbls/d in fixed price oil swaps for the fourth quarter of 2012 at an average price of $98.31 Canadian per barrel and 1,000 bbls/d in fixed price oil swaps for calendar 2013 at an average price of $102.21 Canadian per barrel.
Renegade drilled 14 gross (10.2 net) wells in the third quarter of 2012, bringing the year to date total to 26 gross (19.3 net). Renegade continues to maintain its strong focus on both the Frobisher and Souris Valley trends with increased well performance, facility capacity and increased acreage providing long term growth potential. A total of 12 gross (9.5 net) wells were drilled along these key trends.
Wordsworth & Queensdale
During the third quarter of 2012, Renegade drilled and completed 4 gross (2.5 net) wells in the Wordsworth and Queensdale areas.
Three gross (1.5 net) horizontal Frobisher wells were drilled in Wordsworth area, with a dual leg horizontal yielding a 30 day initial production average of over 180 bbls/day and Renegade’s first three leg horizontal well having a 30 day initial production average of 290 bbls/day.
Renegade drilled 1 gross (1.0 net) vertical in its new Queensdale area. The vertical well provided key reservoir data within its large contiguous land position. Renegade is currently in the process of licensing 3 horizontal wells offsetting the vertical and anticipates drilling to commence on the first of these wells in the fourth quarter.
Renegade drilled 3 gross (2.2 net) wells in the Crystal Hills area of southeast Saskatchewan in the third quarter of 2012. An additional 1 gross (0.3 net) well drilled in the second quarter was brought on production in the third quarter. Renegade’s drilling program in the Crystal Hills area has yielded 30 day initial production rates on average of 92 bbls/day which is above Renegade’s budgeted type curve of 54 bbls/day.
During the third quarter, Renegade drilled 5 gross (5.0 net) wells and additionally completed 1 gross (1.0 net) well that was drilled in the second quarter in the Redvers area of southeast Saskatchewan.
As a result of the financing completed in March 2012, Renegade has accelerated the infrastructure development in the Redvers area to accommodate the development of the Souris Valley trend. The Redvers facility has recently been commissioned and is anticipated to be fully operational within the next several weeks which will allow Renegade to begin optimization of Renegade’s initial horizontals in the play.
During the quarter, Renegade used the time in which the facility was being constructed to evaluate the horizontals drilled using advanced means drilling and completion techniques and various production methods to increase well performance once capacity was available. Drilling activity in the quarter consisted of 4 gross (4.0 net) horizontals and 1 gross (1.0 net) vertical well.
West Central Saskatchewan
Renegade continues to experience exceptional well performance in the Viking play of west central Saskatchewan. Renegade’s Viking results continue to be industry leading on long term production and cumulative recoveries which exceeds our independent reserve auditor type curves. Based on public data, Renegade has become a leading Viking producer in west central Saskatchewan over the last 18 months. This accomplishment is attributed to Renegade’s continued technology improvement and disciplined initial production management. Renegade continues to drive down costs with current drilling and completion costs per well of approximately $850 thousand with total on stream costs of approximately $950 thousand. Drilling improvements have been made with the average time from spud to total depth down to 1.5 days from the previous 2.3 days.
Renegade drilled 10 gross (10.0 net) wells in the third quarter of 2012, bringing the 2012 total to 39 gross (38.5 net) wells. All of the wells drilled in the quarter are to be completed and brought on production in November.
Renegade has now drilled and brought onto production 12 gross (12.0 net) wells based on 40 acre spacing. The production results continue to show a strong correlation to the offset 80 acre spacing well type curves.
Alberta Slave Point
Renegade currently has 5 locations licensed and has 12 locations in various stages of licensing at Senex. Due to the transformational shift in Renegade’s strategy, Renegade does not anticipate allocating capital to the Slave Point play for the remainder of 2012. However, Renegade remains excited about the upside on the play and will consider either undertaking a modest capital program in 2013 or identifying potential joint venture partners for these high growth properties. Renegade’s Board of Directors will make a formal decision on the Slave Point play upon the closing of the Asset Acquisition and Arrangement.
Renegade’s common shares trade on the TSX Venture Exchange under the symbol “RPL”. Upon closing of the Asset Acquisition and Arrangement, Renegade anticipates having approximately 202.5 million shares outstanding and 214.0 million fully-diluted shares.
Canadian Phoenix’s common shares trade on the TSX Venture Exchange under the symbol “CXP”. Upon closing of the Arrangement, Canadian Phoenix anticipates having approximately 57.0 million shares outstanding and 59.4 million fully-diluted shares.
The payment and the amount of dividends declared in any month will be subject to the discretion of the board of directors and will depend on the board of director’s assessment of Renegade’s outlook for growth, capital expenditure requirements, funds from operations, potential acquisition opportunities, debt position and other conditions that the board of directors may consider relevant at such future time. The amount of future cash dividends, if any, may also vary depending on a variety of factors, including fluctuations in commodity prices and differentials, production levels, capital expenditure requirements, debt service requirements, operating costs, royalty burdens and foreign exchange rates.
This press release contains forward-looking statements. More particularly, this press release contains forward-looking statements concerning the timing and completion of the Asset Acquisition, the Arrangement, the Private Placement and the Bought Deal Offering, the characteristics of the Acquired Assets, the timing and amount of future dividend payments, the increase to Renegade’s credit facility, Rengade’s future hedging activities, Renegade’s capital expenditure program, Renegade’s drilling plans, the expected ability of Renegade to execute on its exploration and development program and Renegade’s anticipated production (both in terms of quantity and raw attributes) funds flow from operations, operating netbacks, exit net debt and other similar matters.
The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Renegade and Canadian Phoenix, including: (i) with respect to capital expenditures, generally, and at particular locations, the availability of adequate and secure sources of funding for Renegade’s proposed capital expenditure program and the availability of appropriate opportunities to deploy capital; (ii) with respect to drilling plans, the availability of drilling rigs, expectations and assumptions concerning the success of future drilling and development activities and prevailing commodity prices; (iii) with respect to Renegade’s ability to execute on its exploration and development program, the performance of Renegade’s personnel, the availability of capital and prevailing commodity prices; and (iv) with respect to anticipated production, the ability to drill and operate wells on an economic basis, the performance of new and existing wells and accounting risks typically associated with oil and gas exploration and production; (v) oil prices; (vi) currency exchange rates; (vii) royalty rates; (viii) operating costs; and (ix) transportation costs.
Although Renegade and Canadian Phoenix believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because neither Renegade nor Canadian Phoenix can give any assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary financing in respect of the purchase price of the Asset Acquisition, the failure to obtain necessary regulatory, shareholder and court approvals for the Transaction and risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; and uncertainties resulting from potential delays or changes in plans wi
h respect to exploratio