EQUAL ENERGY LTD. company history: the story so far

History

Equal Energy, successor to Enterra Energy Trust, agreed in 2013 to a US$5.43 per share cash sale to Petroflow and delisted in 2014.

2010-2012: From trust to company

Equal Energy Ltd. began on May 31, 2010, when Enterra Energy Trust completed a court-approved reorganisation. Unitholders swapped each trust unit for one-third of a new Equal common share. The assets, liabilities, directors, management and employees were the same as Enterra's, and Equal became its successor, trading on the NYSE and TSX as EQU. The company's main property was a Hunton liquids-rich natural gas field in Oklahoma, and it was run from Oklahoma City. The record for the following two and a half years is quiet. By the end of 2012 there were 35,226,526 shares on issue.

2013-2014: The sale to Petroflow

The story turned on February 27, 2013, when Montclair Energy made an unsolicited proposal of US$4.00 per share. Equal began a review and contacted 19 potential bidders. Two made final proposals, and the board judged Petroflow Energy Corporation's the better one.

On December 6, 2013, Equal agreed to be acquired by Petroflow for US$5.43 per share in cash, about US$230 million in total. The deal needed a 66 2/3% shareholder vote plus a majority of the minority, court approval, and financing for Petroflow. Equal would owe a US$2 million termination fee in certain cases. Directors and officers holding about 1.9% of shares agreed to vote in favour. Petroflow was also to offer to buy the CAD$45 million convertible debentures at 101% of face value plus accrued interest within 30 days after closing. The board unanimously backed the sale. A preliminary proxy, a draft shareholder document, followed on December 31. Montclair kept criticising the deal, including in releases in April 2014. Shares on issue rose to 36,775,467 by the end of 2014, though the beats do not explain the change.

On May 2, 2014, the closing deadline was moved from May 1 to July 31, 2014, because Petroflow had obtained financing commitments. The price stayed the same, with two US$0.05 dividends, one paid on May 28 and one at closing. On May 7, Equal extended its gas processing agreement with Scissortail Energy, covering over 90% of gas production, to July 31, 2021. New pricing from August 1, 2014 was expected to cut 2014 cash flow by about $1.3 million.

The final proxy was filed on June 11, 2014, setting the shareholder vote for July 8 in Calgary. On July 31, 2014, the exchange filed to remove a class of Equal's securities from listing. On October 21, 2014, Equal terminated the registration of a class of securities, ending its reporting obligation for them.

Written from the 8 story beats below (2010 to 21 Oct 2014), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

shares on issue market cap (log scale)

201436.8m shares

21 Oct
EQUAL ENERGY LTD. terminated the registration of a class of securities, ending its reporting obligation for them.
listing compliance notice
36.8m sh
31 July
EQUAL ENERGY LTD.'s exchange filed to remove a class of its securities from listing.
listing compliance notice
36.8m shC$219m
11 June
Equal filed its final proxy statement for the Petroflow sale, with the shareholder vote set for July 8, 2014 in Calgary. Shareholders would receive US$5.43 in cash per share plus a US$0.05 dividend at closing, the board unanimously recommends voting for it, and approval needs 66 2/3% of votes cast plus a majority of the minority and court approval. This follows the preliminary proxy filed in December 2013 and the May 2014 amendment. Directors and officers, holding 848,814 shares (2.4%), have agreed to vote in favour.
business combination
36.1m shC$206m
7 May
Equal amended its gas processing agreement with Scissortail Energy (a Kinder Morgan subsidiary), which was due to end April 30, 2014. The term now runs to July 31, 2021 with a new pricing formula from August 1, 2014, expected to cut 2014 cash flow by about $1.3 million. The agreement covers over 90% of current gas production.
material agreement
36.1m shC$179m
2 May
Equal and Petroflow amended their December 2013 deal: the deadline to close moved from May 1 to July 31, 2014, and Equal will pay two US$0.05 per share dividends (one on May 28, 2014 to holders of record May 15, and one when the sale closes). The US$5.43 per share cash price is unchanged. The press release says the extension was granted because Petroflow has obtained financing commitments, and it also responds to Montclair's April 2014 releases criticising the deal.
business combination
36.1m shC$179m

201335.8m shares · C$203m market cap

31 Dec
Equal filed a preliminary proxy for the special shareholder meeting (date still blank) to vote on the US$5.43 per share cash sale to Petroflow, with the board unanimously recommending a vote in favour. The proxy says the sale followed a review that began with Montclair's unsolicited US$4.00 per share proposal on February 27, 2013; Equal contacted 19 potential bidders, and two submitted final proposals, with Petroflow's judged superior to Montclair's. Shareholders who don't dissent would receive US$5.43 per share in cash less withholding taxes, reduced by any extra dividends declared before closing (the US$0.05 dividend paid December 20, 2013 is permitted). This is a draft, not final.
business combination
35.8m shC$203m
10 Dec
On December 6, 2013, Equal agreed to be acquired by Petroflow Energy Corporation (through its subsidiary Petroflow Canada Acquisition Corp.) for US$5.43 per share in cash, about US$230 million in total. The deal needs a 66 2/3% shareholder vote plus a majority of the minority, court approval, Petroflow obtaining financing, and dissent rights not exceeding 5% of shares, among other conditions; Equal owes a US$2 million termination fee in certain cases. Directors and officers holding about 1.9% of shares have agreed to vote in favour, and Petroflow is to offer to buy the CAD$45 million convertible debentures at 101% of face value plus accrued interest within 30 days after closing.
business combination
35.8m shC$192m

2010

1 June
On May 31, 2010, Enterra Energy Trust completed a court-approved reorganisation in which its unitholders swapped each trust unit for one-third of a new Equal Energy Ltd. common share. Equal has the same assets, liabilities, directors, management and employees as Enterra had, and this filing notifies the SEC that Equal is Enterra's successor issuer. Shares trade on the NYSE and TSX as EQU.
business combination