NAL acquires Breaker Energy for C$310 million

CanadaÔÇÖs NAL Oil & Gas Trust has agreed to buy junior oil exploration company Breaker Energy for C$310 million, the two companies announced today. As a result of the deal, NAL will acquire the oil-focused Irricana property in central Alberta and the Fireweed natural gas reserve in north-eastern British Columbia. NAL will also gain around 140,000 undeveloped acres as part of the agreement, an increase of 34 percent on its current acreage. BreakerÔÇÖs average production for this year is expected to be around 6,700 barrels of oil equivalent per day. Its proven reserves are equivalent to 12 million barrels of oil, with a further 11 million barrels listed as probable. The acquisition will increase NALÔÇÖs proved and probable reserves by 32 percent, to the equivalent of 96 million barrels.  Calgary-based NAL, which has roughly 60 percent of its reserves in natural gas properties, has recently been seeking to strengthen its portfolio through acquisitions and joint ventures.  Earlier this year, NAL acquired Canadian firms Alberta Clipper Energy and Spearpoint Energy, and also entered into a joint venture to develop the Cardium oil play in central Alberta. NAL is currently an oil and gas royalty trust, with a high percentage of its profits distributed to its shareholders as dividends. However, there are plans to convert NAL into a corporation by 2011, due to a change in federal tax policy that will see royalty trusts taxed from that year going forward. Commenting on the deal, NAL's president and CEO Andrew Wiswell said: "The acquisition of Breaker represents another significant step in the repositioning of NAL to convert to a corporation in 2011.  ÔÇ£Our game plan has been to add quality assets with upside opportunity through internal investment and acquisitions, and Breaker certainly fits this direction.  ÔÇ£Upon completing the acquisition of Breaker, NAL will have finalized four significant transactions in 2009, all of which have enhanced NAL's portfolio.ÔÇØ Dan O'Neil, president and CEO of Breaker Energy, added: "Our asset base, which is currently weighted 45 percent to oil, is a great fit to NAL's current asset base.  ÔÇ£Our assets under the financial position of NAL will allow the combined entity to high-grade its opportunities and fully develop and expand Breaker's potential in a timely manner." The deal, which is supported by BreakerÔÇÖs board, is expected to close in December this year. Under the terms of the agreement, Breaker will have to pay a non-completion fee of C$12 million to NAL if the deal does not go through. *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *