Equal Energy Ltd. has confirmed that the sale of its royalty and fee title lands in western Canada to Keystone Royalty Corp. closed as scheduled on Dec. 13. Cash proceeds are $12.13 million. Equal has also agreed to assign residual Canadian resource income tax pools to Keystone as part of the royalty sale transaction.
The royalty sale is the final transaction in a series of asset sales concluded as part of Equal’s recently completed strategic review process.
The company has also secured a drilling rig ideally suited for drilling in the Hunton play in Oklahoma. Drilling was expected to commence in early January.
The company has contracted the same rig in the past and has experienced excellent performance from the equipment and crew.
“Our technical team in Oklahoma has a well thought-out drilling program aimed at maximizing production and reserves within our 2013 capital budget,” said Don Klapko, Equal’s president and CEO. “Our goal is to optimize both capital and operating costs and we are excited to get the program under way.”
Management is also acting decisively to reduce overhead in the Canadian office as Equal’s focus shifts to its operations in Oklahoma. A small staff will remain in Calgary to ensure that all year-end reserve and financial reporting requirements are met on a timely basis.
Equal expects to save more than $7.5 million in overhead and interest costs in 2013 compared with 2012 as a result of the focus in Oklahoma, and the substantial reduction in debt brought about by the asset sales.
The company also announced that Dan McKinnon, senior vice president of Engineering, left the company, effective Dec. 31.
“Dan joined us earlier this year, quickly came up to speed and has made a valuable contribution to Equal during his time here,” Klapko said. “He put a major effort into the strategic review process and was a key part of its success.”
Equal has begun a search to fill various senior positions in Oklahoma, notably in the exploration, engineering and finance functions. Both internal and external candidates will be considered. Separately, the board of directors is actively reviewing its composition to take account of the fact that the company’s asset base is now entirely in Oklahoma.