200,000,000 USDSALE OF YELLOW ROSE AND BLUEBONNETAntares Energy...

200,000,000 USD
SALE OF YELLOW ROSE AND BLUEBONNET

Antares Energy Limited (�Antares�, ASX:AZZ) is pleased to announce it has negotiated the sale of its Yellow Rose and Bluebonnet assets. Chesapeake Energy Corporation (�Chesapeake�, NYSE:CHK) has agreed to purchase 100% of 23,180 net oil and natural gas leasehold acres in McMullen County, Texas from Antares and its partner San Isidro Development Company (�SIDC�). The consideration for the sale will be $200,000,000 cash, subject to customary closing adjustments. Closing of the transaction is anticipated to occur on or before 15th December.
The 200,000,000 USD represents a transaction value per net acre of $8,628/acre. The table below shows the value of Eagle Ford shale transactions within the past year. The average value of all the transactions is $7,098/acre while the average value of transactions between 10,000 and 40,000 acres is $6,356/acre. The price achieved of $8,628/acre represents a premium of 21.5% over all transactions and a premium of 35.7% over transactions between 10,000 and 40,000 acres. Please note this transaction has been priced as a cash sale and not as a joint venture transaction.
The value of transactions greater than 40,000 acres was $9,391/acre. Considering the relative size of the combined Yellow Rose and Bluebonnet assets being 23,180 acres, the realisation of a price of $8,628/acre is a testament to the investments made in the acquisition of 3D seismic data, the degree and quality of infrastructure in place, the access to hydraulic fracturing services and a quality drilling rig on a long term contract.
Eagle Ford Shale Transactions
A.C.N. 009 230 835
The singular focus throughout the life of each of these projects was to create shareholder value. In 2008 after a thorough review of the regional geology and the insights 3D seismic data provided, Antares quickly recognised the Eagle Ford shale had the potential to be a world class shale play. The drilling of the Frances Dilworth No. 2 confirmed this view and the Antares acreage footprint rapidly expanded from 4,200 net acres to over 18,000 net acres.
Operationally, Antares realised that to differentiate itself, investments had to be made in infrastructure and a concerted effort be made to better understand the production characteristics of the Eagle Ford shale. This was achieved by investment in large diameter gas pipelines being laid throughout the properties, a centrally located �frac-pond� built to service the water needs of the completion operations and radically different fracture stimulations performed on each of the wells to collect the scientific data necessary to design future, optimal fracture stimulations.
The success of this philosophy is evidenced by the leading North American oil and natural gas resource player, Chesapeake Energy, selecting this project over a number of Eagle Ford shale opportunities currently available on the market. Prior to purchasing the Yellow Rose and Bluebonnet assets, Chesapeake had acquired 600,000 Eagle Ford shale acres. For Chesapeake to expand upon that impressive position by purchasing the Yellow Rose and Bluebonnet projects, for attractive market prices, speaks to the quality of the science and operations performed by Antares Energy.
Antares� net acreage position in the Yellow Rose and Bluebonnet projects was approximately 18,104 acres or 78.1% of the gross acreage position of 23,180 acres. Therefore, Antares� share of the 200,000,000 USD sale price is 156,200,000 USD. Antares receives USD from its production and pays its operational costs in USD, however for the purpose of comparison, the last year�s average exchange rate of 1 AUD = 0.90 USD, represents a cash value per outstanding share of approximately 0.58 AUD/share. For completeness, the period since 1st July 2008 has an average exchange rate of 1 AUD = 0.85 USD which represents approximately 0.62 AUD/share. Please note that currently the exchange rate is at approximate parity and that Antares will continue to run its treasury to gain the best possible exchange results for shareholders as it has done very successfully in recent years.
James Cruickshank, Antares� Chief Executive Officer, commented, �We are extremely pleased to announce the sale of Yellow Rose and Bluebonnet projects for 200,000,000 USD. Today�s result of the sales process first outlined to the market on 2nd August has added substantial shareholder value. This transaction will provide the necessary capital to invest in extremely attractive new exploration ventures as well as the acquisition of material, existing oil and gas production.
�I am very pleased Antares has retained an interest in the Eagle Ford shale with over 8,900 acres in the high yield condensate region with our operating partner Petrohawk Energy Corporation. Antares will be free carried through the drilling of over 110 wells to fully develop the acreage on 80 acre spacing. The first well in this acreage surpassed all expectations by averaging 1,180 barrels of condensate equivalent per day (Bce/d) in its inaugural month. A second well with a lateral length approaching 8,000 ft is awaiting fracture stimulation and we are looking forward to sharing those results with you soon.
�Finally, I would like to thank those who have been shareholders of Antares during the two and a half years since I accepted the role of Chief Executive Officer on 1st July 2008. At that time, the company�s share price was less than 0.07 AUD/share, the market capitalisation of the company was approximately 10 million AUD, cash at bank was approximately 2 million AUD and Antares� exposure to the Eagle Ford shale was limited to 4,200 acres. Antares as a result of the hard work, focus and extraordinary commitment of the Board of Directors and management has come a long way, inclusive of joining the S&P/ASX 300 index. Antares� management team is now well empowered to achieve its previously advised self imposed commitment to shareholders of realising a share price of 1.00 AUD by 31st December 2011, 1.50 AUD by 31st December 2012 and 2.00 AUD by 31st December 2013.
�I hope you share my excitement about the future of Antares. The infusion of capital now puts Antares in the enviable position of being able to select only those projects of the highest calibre in which to deploy resources. I look forward to sharing the details of these new opportunities with you in the near future.�
Scope and Scale of 2010 Eagle Ford Transactions
Antares wishes to thank its advisor to the transaction, Tudor, Pickering, Holt & Co. Securities, Inc. for their professionalism and tireless dedication throughout the sales process.
Taxation
Antares intends to qualify for use of Section 1031 of the Internal Revenue Code. This section allows for the redeployment of capital from the completion of an asset sale of one project into another project within 180 days without the realised gain being recognised at the time of the exchange.
Antares is working with its US accountants to achieve an outcome which should result in the absolute minimisation of taxation realisation as a result of the sale of the Yellow Rose and Bluebonnet projects.