Blackbird Energy Inc. and Pipestone Oil Corp. Combination

Cormark Securities Inc., as Lead, and BMO Capital Markets are acting as financial advisors to Blackbird with respect to the Transaction. Bennett Jones LLP is acting as Blackbird’s legal advisor. Peters & Co. Limited is acting as the exclusive financial advisor to Pipestone Oil with respect to the Transaction. National Bank Financial is acting as strategic advisor to Pipestone Oil and the Lead Arranger and Sole Bookrunner with respect to the Credit Facility. CIBC World Markets acted as a strategic advisor to the CNOR LP board of directors. Osler, Hoskin & Harcourt LLP is acting as Pipestone Oil’s legal advisor.

Blackbird Energy Inc. (TSX-V: BBI) and Pipestone Oil Corp. have entered into an agreement that provides for the combination of Blackbird and Pipestone Oil. Concurrent with the Transaction, Blackbird and Pipestone Oil have entered into agreements with certain of their existing shareholders who have committed to common equity financings totaling $111.0 million and Pipestone Oil has arranged $198.5 million of debt financing. The Transaction and Financings will result in the strategic combination of two adjacent and contiguous Pipestone Montney land bases under a single well-capitalized, high growth company that will operate under the name Pipestone Energy Corp.

Pipestone Energy will be the operator of a pure-play condensate-rich Montney asset in the Pipestone area near Grande Prairie with proved plus probable reserves of ~165 MMboe (~36% condensate / oil + ~11% NGLs) and risked best estimate contingent resources of ~221 MMboe (~36% condensate / oil + ~10% NGLs) booked on only ~58% of total lands, as evaluated by McDaniel & Associates Consultants Ltd.

The Transaction will be completed by way of an amalgamation of Blackbird and Pipestone Oil to create Pipestone Energy pursuant to a plan of arrangement under the Business Corporations Act (Alberta) with a pre-Arrangement continuance of Blackbird to Alberta. Pursuant to share conversion terms under the Arrangement, the issued and outstanding common shares of Blackbird will be converted to common shares of Pipestone Energy and effectively consolidated on a 10:1 basis. Pipestone Oil’s sole shareholder Canadian Non-Operated Resources L.P. will be entitled to receive 103.75 million New Shares. Upon completion of the Arrangement and Financings, Blackbird shareholders would own approximately 45.1% of the New Shares to be outstanding.

The amalgamation of Blackbird and Pipestone Oil is intended to be tax-deferred for Canadian federal income tax purposes for shareholders of both entities and to qualify as a tax-free reorganization for U.S. federal income tax purposes. As part of a share reorganization under the Arrangement, Blackbird’s minority interest in the Stage Completions Group of Companies will be transferred to a holding company whose shares will be distributed to Blackbird’s shareholders.

irkland & Ellis LLP advised Canadian Non-Operated Resources L.P. with a team including corporate partners Kevin Crews (Picture) and Benjamin Adelson and associate Alex Poor; and tax partner Lane Morgan.

Involved fees earner: Kevin Crews – Kirkland & Ellis; Benjamin Adelson – Kirkland & Ellis; Alex Poor – Kirkland & Ellis; Lane Morgan – Kirkland & Ellis;

Law Firms: Kirkland & Ellis;

Clients: Canadian Non-Operated Resources L.P.;

Author: Ambrogio Visconti