COMPTON PETROLEUM CORP

Compton agreed a deal with MFC Industrial Ltd., which will offer $1.25 in cash per share for all Compton shares (about $33.0M based on 26,358,528 shares outstanding). The board unanimously recommends shareholders tender. Holders of about 54% of the shares have signed lock-up agreements with MFC, and the offer is conditional on at least 66 2/3% of fully-diluted shares being deposited, regulatory approvals, lender approval of a continued credit facility and agreement from the MPP term financing providers. Separately, MFC will buy 6,548,498 special warrants at $1.25 for about $8.2M (about 24.8% dilution, giving MFC 19.9% of the then-outstanding shares), with the money held in escrow until lender consent and then used with the Bigoray sale proceeds to partly repay the $30.0M overdrawn on the credit facility. The lenders extended the cure period to the earliest of September 30, 2012 (extendable to as late as October 30, 2012), completion of the offer, or lender termination. This follows the many short extensions and the July 5 Bigoray sale, and it is the first concrete recapitalization outcome after weeks of unspecified 'progress'. The offer is expected to close by early September 2012.

capital raising announcement

Compton agreed to sell its Bigoray assets near Niton in central Alberta, plus about 5,600 gross acres of Cardium mineral rights at Niton, for expected gross proceeds of $17.0 million, subject to lender approval. The money would repay part of the $30.0 million drawn over the $110.0 million credit facility limit, so it covers only part of the overshoot. The properties produced about 450 boe/d over the past three months; closing is expected at the end of July 2012, and Compton keeps about 110,900 gross acres at Niton.

asset acquisition disposition

Compton's lenders cut its credit facility from $140.0 million to $110.0 million, citing a lower natural gas price forecast; the facility is fully drawn, so the $30.0 million over the new limit is due May 7, 2012 (the lenders may extend this depending on progress). Compton hired RBC Capital Markets on March 12, 2012 to advise on recapitalizing through asset sales and/or an equity raise. Net debt is about $166.0 million, cash about $8.8 million, and 2012 guidance is 10,800-11,200 boe/d year-end production, $6.0-$10.0 million cash flow and $14.0-$16.0 million capital spending. This follows the 2011 recapitalization, which cut debt but left bank borrowing as the pressure point (bank debt rose from $103.1 million at Q3 2011 after about $35.0 million of 2011 capital spending). The lenders say they support the recapitalization plans.

debt financing

Compton completed the plan of arrangement: all US$193.5M of 10% senior notes and US$45M of mandatory convertible notes were exchanged for common shares and rights. Only the rights offering remains, expiring September 20, 2011 with closing expected September 27, 2011. This ends the open question of whether the convertible notes would be repaid in cash or turned into shares. Four long-serving directors (including Chairman Mel Belich) retired and four new directors were appointed, with Adrian Loader as Chairman.

business combination

Noteholders and shareholders approved the recapitalization, and the Alberta court issued a final order. All the US$193.5M of 2017 notes and US$48.8M of mandatory convertible notes are to be turned into equity, with the 1-for-200 share consolidation going ahead. The company says it retires about $274.3M of debt and raises the bank facility's total credit capacity to $160.0M. Existing shareholders get rights to buy more shares, and the company states that those who do not use their rights will be diluted more. The rights offering is expected to close around September 21, 2011. This resolves the vote step set out in the June circular.

business combination

Compton circulated a proposal (dated June 24, 2011) to cut its debt further, saying continued low natural gas prices prompted it. The US$193.5M of 10% notes due 2017 and US$46.8M of mandatory convertible notes would be converted into shares. Existing shares would be consolidated 1-for-200, and existing shareholders would get warrants and rights to buy more shares at $7.82. The company says about $270.4M of debt would be retired, with noteholders getting 90.5% of the new shares. Noteholders and shareholders vote July 25, 2011. This follows the October 2010 note exchange and replaces the plan to repay or convert the mandatory convertible notes in 2011.

debt financing

Compton completed the note restructuring: all the senior notes were exchanged for cash, US$193.5M of 10% senior notes due 2017 and US$45M of 10% mandatory convertible notes due Sept 15, 2011. This completes the plan proposed in July and approved by the court in September. The filing does not state the cash amount paid; the convertible notes could still lead to new shares if not repaid before maturity (per the earlier release).

business combination

Compton received the Alberta court's final order approving the plan to exchange all US$450M of 7 5/8% senior notes for cash and new 10% notes due 2017, including US$45M swapped into mandatory convertible notes due Sept 15, 2011. If any convertible notes remain at maturity, up to 65,631,345 new common shares (about 24.9% of current shares) could be issued; the TSX has conditionally approved listing them, and Compton says it has no current intention to issue shares. Completion is expected around Oct 18, 2010, subject to customary conditions. This continues the July plan.

business combination

Compton filed its circular proposing a plan to restructure the US$450M 7 5/8% senior notes due 2013: holders could elect cash plus 10% mandatory convertible notes due Sept 15, 2011, or new 10% notes due Sept 15, 2017, at US$940 per US$1,000 of principal, subject to caps. The mandatory convertible notes would convert into Compton common shares at maturity at 95% of a 20-day average price unless repaid in cash first, so shareholders could be diluted. The board says the plan cuts net debt by about Cdn$217.4M and would let Compton increase availability and lower the interest rate under its bank facility; noteholders vote Sept 14, 2010, with elections due Sept 10.

debt financing

Compton closed one of two sales of assets in the Niton and Gilby areas of central Alberta for $115 million; both sales together are expected to bring in $150 million gross, with the second due to close in mid-July 2010. It also received a final $9.5 million for the last 0.5% of the 5.0% overriding royalty sold after the Sept 2009 agreement. Proceeds will reduce debt and add capital for the 2010 development program. The company is now listed on the TSX only (NYSE is no longer named).

asset acquisition disposition

Compton agreed to sell overriding royalties (a share of gross production revenue) to two parties for about $54.5 million, with an option for a further $47.5 million, up to $102.0 million in total, to repay bank debt. The royalty is 2.5%, with an option for a further 2.5% by Dec 24, 2009, and covers substantially all of its current proved, probable and possible assets. With the equity offering, total debt is expected to fall by about $263.0 million, or $216.0 million if the option is not exercised. Closing is expected in October 2009.

asset acquisition disposition

Compton completed the annual renewal of its reserve-based credit facility with a syndicate of four banks: a $353 million revolving term facility and a $30 million working capital facility, $383 million in total. It has drawn $340 million so far; the facility is reviewed twice a year (Dec 31 and July 2) and is up for renewal in July 2010. The company ties the facilities to its 2009 needs and its 'recapitalization objectives'. This follows the bank debt of $470M (June 2008) reduced after the 2008 property sales, and the 2008 corporate sale process, whose outcome this filing does not mention.

debt financing

Compton said it is seeking a buyer for all of its shares, previously announced, and is starting marketing now with a data room opening Sept 8, 2008. Its internally prepared Aug 1, 2008 reserve update shows proved plus probable reserves of 268 million boe, versus 271 million at year-end 2007; this excludes four non-core property sales. Three of those four have closed and the fourth is due Sept 8, with net proceeds of about $210 million going to reduce bank debt. After that and a $31 million foreign exchange contract gain, pro forma long-term debt is $687 million versus $906 million at June 30, 2008. The Cecil sale left open earlier is not mentioned in the visible text.

resource reserve update

Compton completed its acquisition of WIN Energy, which is now a wholly owned subsidiary. The price was $0.45 per share, up from the $0.37 first announced, plus $0.01 per warrant, for about $30 million in total versus about $24 million originally. Compton plans to have WIN delisted from the TSX Venture Exchange and stop being a reporting issuer in Canada. This completes the deal announced Sept 17.

business combination

Compton completed the sale of its Worsley conventional oil assets in the Peace River Arch area to Birchcliff Energy for $270 million cash. This closes the sale announced on Sept 4 for the scheduled Sept 27 date. The filing does not say how the proceeds are used; the earlier announcement said they would reduce syndicated senior debt.

asset acquisition disposition

Compton agreed to buy WIN Energy by plan of arrangement for $0.37 per share and $0.01 per warrant in cash, about $24 million in total before costs. WIN holds undeveloped land in Alberta and Montana, a gas plant in the Cowley area and seismic data, and the deal would nearly double Compton's Callum/Cowley acreage to 223 sections. It needs 66 2/3% approval at a WIN meeting set for Nov 22, 2007, plus court and regulatory approvals; WIN agreed not to solicit rival offers, and in some circumstances owes Compton a $1 million fee.

business combination

Compton agreed to sell its Worsley light oil assets in Alberta to Birchcliff Energy for $270 million cash, effective July 1, closing scheduled Sept 27, 2007. Worsley produces about 3,500 boe/d and holds 15.1 million boe proved plus probable reserves, 6% of Compton's total at Dec 31, 2006. Proceeds will reduce syndicated senior debt and fund natural gas development. The separate Cecil sale is still targeted for the fourth quarter.

asset acquisition disposition

Compton's subsidiary took up and paid for the Stylus shares tendered (about 99.68%). Compton's Sapieha, Knecht, Millar, Belich, Preston and Stodalka became Stylus directors, replacing the old board, and Sapieha, Knecht and Millar became its officers. Stylus is now controlled by Compton, completing the take-over, though the compulsory acquisition of the remaining shares was still to come.

business combination

Compton said its subsidiary had received tenders for about 99.68% of Stylus shares (26,551,650 shares) under the offer, with all conditions satisfied. It will pay for them and plans to buy the remaining shares by compulsory acquisition on the same terms.

business combination

Compton agreed with Stylus Energy to make a cash take-over offer of $2.70 per Stylus share, a 20% premium to its latest close, worth about $91 million including roughly $12 million of net debt. Stylus's properties are in Compton's core areas, with Vulcan, Alberta singled out for synergies. The offer requires at least 66 2/3% of Stylus shares and regulatory approvals, with closing expected mid-August 2007.

business combination

Compton priced a further US$150 million of 7 5/8% Senior Notes due 2013, issued under the same November 2005 indenture as the original US$300 million, expected to close around April 4, 2006. Proceeds are intended to repay part of its senior secured credit facilities. This adds to the notes issued in November 2005.

debt financing

Compton closed a US$300 million offering of 7 5/8% Senior Notes due 2013 (issued by its subsidiary Compton Petroleum Finance, guaranteed by Compton and its other significant subsidiaries). Holders of about 96% of the old 9.90% notes tendered and agreed to the indenture changes, which are now binding; the offer was due to expire Nov 29, 2005. Net proceeds funded the purchase of the tendered 9.90% notes and the rest will repay part of the senior secured credit facilities. This completes the tender offer and new debt placement left open earlier.

debt financing

Compton said (Oct 27, 2005) it will continue pursuing approval of the North Okotoks sour gas well licences, which requires Board approval of a revised emergency response plan after further public consultation. This answers the November 1 deadline question: it will proceed. Separately, on Oct 31 Compton and its subsidiary Compton Petroleum Holdings launched a tender offer for any and all of its 9.90% Series A Senior Notes due 2009, with a $30 per $1,000 consent payment for tenders by Nov 14 and a Nov 29 expiry. It also seeks to remove most of the notes' restrictive covenants. The offer depends on conditions including a majority of the notes being tendered and proceeds from a private placement of new debt. The purpose of the new debt is described only as funding the purchase.

debt financing

Compton asked the EUB to modify the August 15 deadline, and the Board extended it to November 1, 2005 for Compton to say whether it will pursue the Okotoks well licences. Compton cited unclear requirements, a legal challenge by the Calgary Health Region to the decision, and that body's claim of concurrent jurisdiction over emergency planning. Compton says these must be resolved before it commits to proceed. This continues the unresolved licence issue.

regulatory community update

Compton commented on Alberta regulator (EUB) Decision 2005-060 on its applications to drill six sour gas wells in the Okotoks Field. It highlighted the finding that the wells can be drilled and operated safely, but the decision imposes emergency response planning conditions, including a sheltering zone, that Compton is still assessing. The Board asked for Compton's response by August 15, 2005. The licences have not yet been granted.

regulatory community update

Compton filed the paperwork for a Canadian share offering: a preliminary prospectus (Feb 2, 2005), an underwriting agreement, and a final prospectus (Feb 14, 2005), plus a release on a 2005 capital and drilling program. The excerpt shows the share count and price left blank, so the size isn't given here. Part of the proceeds is to repay bank debt owed to lenders affiliated with some underwriters. The 124,955,306 shares outstanding by March 2005, up from 117,242,073 a year earlier, are consistent with new shares being issued (an inference).

regulatory community update

Compton reported its year-end 2003 reserves, as reviewed by independent evaluator Netherland Sewell: proved plus probable reserves of 119 million barrels of oil equivalent (80% natural gas), up 15% after production, and proved reserves of 85 million, up 3%. Proved plus probable reserves were valued at $1,008 million at an 8% discount rate. Results for the year were to be released April 28, 2004.

resource reserve update