Vero Energy Inc. has entered into an asset purchase and sale agreement for the divestiture of certain natural gas assets of the Company to a private oil and gas company for gross proceeds of $209 million, subject to closing adjustments. Closing of the Transaction is anticipated to occur on or about January 31, 2012 and is subject to customary conditions for an asset divestiture of this nature.

The Disposition Assets are primarily focused in the deep basin region of West Central Alberta and include related facilities but excludes zones from surface to base Cardium, which represent estimated average daily production of 7,296 boe/d (86% Natural Gas) during the fourth quarter of 2011 and 26.5 mmboe of proved plus probable reserves at December 31, 2010.

"Through an extremely volatile political, regulatory and commodity price period the Vero team has grown production in the Company 844% and 260% on a per share basis during the past six years primarily through the drill bit," said Doug Bartole President and CEO, "the team is very excited about this transaction as it allows for all shareholders to be involved in a focused, well capitalized and debt free growth oriented junior exploration Company in a pure light oil play producing top quartile operating netbacks. The Company will have a solid land base and a high quality drilling inventory of 4-5 years with recent results of the latest wells drilled having IP30 production rates of over 350 boe/d. This transaction puts us back to a size where in our initial two years we provided drill bit production growth of over 380% and 200% on a per share basis."

From the date of the Agreement until closing of the Transaction, Vero has agreed not to solicit or initiate discussions regarding any other business combination or sale of material assets and has granted the purchaser the right to match any superior proposals. The Agreement provides for a $15 million non-completion fee payable to the Purchaser in certain circumstances if the Transaction is not completed and a $10 million deposit to be retained by Vero in certain circumstances if the Transaction is not completed.

A portion of the cash proceeds from the Transaction are expected to be distributed to Vero shareholders, with the balance being utilized to eliminate Vero's current bank indebtedness. It is anticipated that Vero will convene a meeting (the "Meeting") of Vero shareholders in the next 60 days to approve the proposed cash distribution, representing approximately $0.30 per outstanding Vero share on a non-diluted basis. The exact amount of the cash distribution and the date for determining the Vero shareholders of record who will be entitled to the distribution will be confirmed at a later date.

Tags: Vero Energy