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Iron Bridge’s Continued Operational Underperformance Underscores Rationale for Shareholders to Tender Their Shares to Velvet Energy’s Offer

CALGARY, July 30, 2018 – Velvet Energy Ltd.
  • Velvet Energy is offering Iron Bridge shareholders $0.75 in cash per common share, representing an immediate 58% premium to the $0.475 closing price of Iron Bridge common shares on May 11, 2018, the last trading day prior to the submission of Velvet’s offer letter to the Iron Bridge board of directors
  • Iron Bridge’s recent results underscore ongoing destruction of shareholder value, confirming that the status quo is a risky and inferior alternative to Velvet’s all-cash premium Offer
  • The volume weighted average price (“VWAP”) since Velvet’s announcement is $0.75 per share, and has been trending lower recently, highlighting the market’s view that a superior alternative does not exist
  • Iron Bridge shareholders can tender their shares today by contacting Kingsdale Advisors at 1-866-879-7650 or by e-mail at contactus@kingsdaleadvisors.com.

 

CALGARY, July 30, 2018 – Velvet Energy Ltd. (“Velvet” or “We” or “Us”) reminds shareholders of Iron Bridge Resources Inc. (TSX: IBR) (“Iron Bridge” or the “Company”) that Velvet’s all-cash offer to acquire all of the issued and outstanding common shares of Iron Bridge for $0.75 in cash per common share (the “Offer”) will expire at 5:00 p.m. (Toronto time) on September 12, 2018.

“As we approach the expiration date of our Offer, publicly available production data confirms that Iron Bridge is continuing its lacklustree performance, failing to deliver on its production targets and markedly falling short of industry benchmarks,” said Ken Woolner, President and Chief Executive Officer of Velvet. “These recent results reinforce our view that the status quo is fraught with uncertainty and risk and that Velvet’s Offer provides Iron Bridge shareholders with superior value to any potential alternatives offered by the Company.”

RECENT RESULTS CONFIRM THE STATUS QUO IS A RISKY AND INFERIOR ALTERNATIVE

Iron Bridge’s investor communication since Velvet publicly announced the Offer has focused on asking shareholders to believe in a potential upside beyond the certainty of Velvet’s fully-financed, all-cash offer of $0.75 common share. Iron Bridge’s claims of its own asset values are more founded in assertion and rhetoric than they are in fact. It’s important that this promotional messaging is put in context based on facts now available through publicly available data.  

Iron Bridge’s press release dated May 17, 2018 referenced the initial performance of two new Montney wells at Gold Creek, identified as 102/8-21-68-3W6 and 100/8-21-68-3W6, which together were producing oil-equivalent production of 3,142 boe/d (19% oil & 12% natural gas liquids (“NGL”)).  Publicly available information from Petrinex for the month of June indicates that, despite these wells being on production for over 98% of the month, they are materially underperforming these initial results, with combined production at the significantly reduced rate of approximately 1,900 boe/d.  

More importantly, these wells are materially underperforming Iron Bridge’s disclosed type curve for light oil production by approximately 60% and 80%, respectively, equating to an oil content of only 13% of reported production.  As the chart below shows, the 102/8-21 well produced 166 bbl/d and the 100/8-21 well 81 bbl/d of light oil in June, significantly below Iron Bridge’s oil type curve of approximately 450 bbl/d in the first 60 days on production. This is important as crude oil revenues drive the rate of return on these wells.  

Source: Iron Bridge Resources Inc. April 2018 corporate presentation, slide 6.

These results are significantly below regional results and underscore that management has yet to demonstrate an understanding of the subsurface or an ability to optimize drilling and completion techniques.

Iron Bridge’s total Montney production for the 30 days in June, filed on Petrinex, was approximately 2,500 boe/d (15% oil) – half of the ~5,000 boe/d productive capability referenced in Iron Bridge’s May 17, 2018 press release.  This significant variance highlights the credibility gap Iron Bridge management has with the investment community. Since the Petrinex Alberta public data is based on crude oil and unprocessed natural gas rates, which do not reflect the conversion of a portion of natural gas production into NGLs, we encourage Iron Bridge management to provide clarity to shareholders on oil, NGL and natural gas sales volumes for its new wells and for second quarter 2018 given this material underperformance relative to results recently disclosed by the Company.  In light of this underwhelming execution, the risk to Iron Bridge shareholders of allowing management to continue to pursue a standalone plan is evident and substantial.

Moreover, as with any resource company, the true state of reserves and the ability to extract them goes to the very heart of valuation.  While type curve economics as presented by Iron Bridge management may look compelling, the underlying value of the Company’s reserves is substantially eroded by virtue of the material underperformance of all of their Montney wells.  We believe these results are likely to result in value to Iron Bridge’s shareholders considerably lower than Velvet’s Offer. Iron Bridge shareholders must now critically examine management’s claims about their assets and their ability to generate value from them.  

As the chart below shows, Iron Bridge continues to significantly underperform the TSX Capped Energy Index – even with the Velvet Offer propping up its stock.

NO ALTERNATIVE PROPOSALS HAVE EMERGED

These results explain why, despite claims of having term sheets in-hand and potential alternative transactions emerging, no viable financing or value-enhancing transaction has surfaced in the two months since Velvet announced its intention to make an offer on May 22, 2018.  

Iron Bridge has had ample time to find alternatives but has failed to do so. Velvet wishes to remind Iron Bridge shareholders that it is within the Company’s control to eliminate false hope and bring forward the bid deadline of the Offer. There is no reason to further unduly delay shareholder’s ability to accept Velvet’s compelling Offer. The volume-weighted average price of Iron Bridge’s common shares since the launch of our Offer on May 22, 2018 on all Canadian exchanges remains $0.75, demonstrating that the market agrees with the valuation of Velvet’s Offer.

TENDER YOUR SHARES TODAY

Consider the benefits, and take the simple steps needed to tender your Iron Bridge common shares to the Offer now. The Offer expires at 5:00 p.m. (Toronto time) on September 12, 2018. If you have any questions or require assistance, please contact Kingsdale Advisors, our Depositary and Information Agent, by telephone toll-free at 1-866-879-7650 with North America and at 1-416-867-2272 outside of North America or by e-mail at contactus@kingsdaleadvisors.com.

Visit velvetenergy.ca/IronBridgeOffer for more information and updates.

ADVISORS

Velvet has retained BMO Capital Markets as its exclusive financial advisor and Bennett Jones LLP as its legal counsel. Kingsdale Advisors is acting as strategic communications advisor and its Information Agent and Depositary.

INFORMATION AGENT

For additional information, including assistance in depositing Iron Bridge shares to the Offer, Iron Bridge shareholders should contact Kingsdale, toll-free in North America at 1-866-879-7650 or call collect outside North America at 1-416-867-2272 or by email at contactus@kingsdaleadvisors.com.

ABOUT VELVET

Velvet Energy Ltd. is a privately-held, full-cycle exploration and production company. Focused in the liquids-rich gas and light oil window of the Deep Basin of Alberta, the Company executes an organic growth business plan, including early land capture, technical evaluation, exploration and development of internally generated prospects. Headquartered in Calgary, Velvet has current production of approximately 24,000 boe per day and a focused land position consisting of over one million net undeveloped acres spanning from its core liquids-rich Ellerslie development in the greater Edson area to early phase Montney light oil exploration at Gold Creek.

IMPORTANT NOTICE

Certain statements contained in this news release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information can be generally identified by the use of words such as “anticipate”, “continue”, “estimate”, “expect”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar expressions. Specifically, forward-looking information in this news release includes statements respecting the Offer, including the benefits, results, effects and timing of any such transaction and the completion thereof, if at all. Forward-looking statements in this news release describe the expectations of Velvet as of the date hereof. These statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation, the ability to obtain regulatory approvals and meet the other conditions to any possible transaction. Although Velvet believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon.

For further information:

Ken Woolner
President and Chief Executive Officer
(403) 781-9134

Chris Theal
Chief Financial Officer
(403) 781-9162

Peter Henry
Vice President, Finance

(403) 781-9133

 

Media Contact:

Kingsdale Advisors
Ian Robertson, 416-867-2333
Executive Vice President, Communication Strategy
irobertson@kingsdaleadvisors.com
Cell: 647-621-2646

Velvet Energy Comments on Iron Bridge Resources’ Directors’ Circular

CALGARY, Alberta, June 20, 2018 (GLOBE NEWSWIRE)
  • Velvet Energy’s offer of $0.75 in cash per common share represents a significant 58% premium to the $0.475 closing price of Iron Bridge common shares on May 11, 2018, the last trading day prior to the submission of Velvet’s offer letter to the Iron Bridge board of directors.
  • Velvet’s all-cash offer represents full and fair value and certainty, which is financially superior to the high-risk “go it alone” alternative.
  • Velvet’s offer is not subject to due diligence and has only limited conditions that are customary for a takeover offer of this kind.
  • Iron Bridge common shares have underperformed, even in a strengthening commodity price environment, reflecting the market’s concerns with Iron Bridge’s business plan and financing ability.
  • Iron Bridge shareholders can tender their shares now by contacting Kingsdale Advisors at 1-866-879-7650 or by e-mail at contactus@kingsdaleadvisors.com.

CALGARY, Alberta, June 20, 2018 (GLOBE NEWSWIRE) — Velvet Energy Ltd. (“Velvet” or “We” or “Us”) today commented on the recently published Directors’ Circular (the “Circular”) issued by Iron Bridge Resources Inc. (TSX:IBR) (“Iron Bridge” or the “Company”) regarding Velvet’s all-cash offer (the “Offer”).

“It is clear from our conversations with supportive shareholders that they believe the Velvet Offer is in their best interests and superior to the uncertainty of a standalone plan,” said Ken Woolner, President and Chief Executive Officer of Velvet Energy. “There is nothing in the Iron Bridge Directors’ Circular that provides a realistic strategic direction for Iron Bridge or that detracts from the strength of our $0.75 per share Offer, which represents a significant 58% all-cash premium to Iron Bridge’s pre-Offer common share price of $0.475, immediate liquidity, and certainty of value against the backdrop of a very uncertain market and a risky Iron Bridge standalone plan.”

Velvet urges Iron Bridge shareholders to consider the following points as they review the Circular:

VELVET’S OFFER REPRESENTS A SIGNIFICANT 58% CASH PREMIUM TO MARKET PRICE

  • Velvet’s 58% premium is fair to Iron Bridge shareholders especially considering the current merger and acquisition environment in the oil and gas sector in Canada, where the two most recent transactions – Baytex Energy/Raging River Exploration and Vermilion Resources /Spartan Energy – saw respective premiums of only 10% and 5%. More broadly, across all takeover transactions in all sectors in Canada since 2000, the median premium was approximately 26%.
  • Iron Bridge’s attempt to discount the premium Velvet is offering and claim credit for stock appreciation fails to account for the fact that Iron Bridge had our $0.75 offer letter in hand for nearly a week prior to the Iron Bridge dissemination of a press release regarding certain well results. During that interim period the stock traded at more than three times the year-to-date average daily volume at higher prices. For this reason, the closing common share price on the TSX on May 11, 2018, the last trading day prior to the submission of Velvet’s offer letter to the Iron Bridge board of directors, is the most accurate reference point when evaluating the size of the effective premium. The effective premium is significantly higher when compared to Iron Bridges’ standalone prospects and unattractive financing options – highly dilutive equity or very expensive and non-traditional debt.
  • At this time, Velvet’s Offer is the highest price and valuation available for Iron Bridge common shares. If Velvet’s Offer was not made or is not accepted, Iron Bridge common shares would be trading materially below $0.75, given the market understands that any junior oil and gas standalone plan will require some form of financing transaction, which has substantial execution risk for a company such as Iron Bridge.

MARKET VALIDATES VELVET’S VALUATION

  • Research analysts and public markets support $0.75 per share as a fair valuation for Iron Bridge.
    — The volume-weighted average price of Iron Bridge’s common shares since the launch of our Offer on May 22, 2018 on all Canadian exchanges is $0.75, demonstrating that the market agrees with the valuation of Velvet’s Offer.
    — In addition, the median one-year forward target price of the equity research analysts that cover Iron Bridge is also $0.75, further validating the market’s support of the Offer. Notably, these target prices were established subsequent to both the Velvet Offer and the disclosure of new well results from Iron Bridge.

REFUTING IRON BRIDGE ASSERTIONS

  • The underperformance of Iron Bridge’s share price is the result of its financial constraints and poor operating results, despite the significant increase in the price of crude oil.
  • Iron Bridge makes an unsubstantiated assertion that there are 500 viable drilling locations on the Company’s lands. Even if this assertion was true, extracting this resource would require over $3.5 billion of capital, unattainable by a company with a pre-Offer market capitalization of approximately $74 million. To put potential dilution into perspective, if our Offer was withdrawn and Iron Bridge’s common shares return to the pre-Offer price of $0.475, the Company would have to issue over 14 million common shares to deliver one additional producing well at the estimated cost of $7.1 million– equivalent to 9.5% dilution per well.
  • Iron Bridge’s future prospects are weighed down by poor cash flow and negative working capital. Following the closing of its Waskahigan asset sale on October 17, 2017, Iron Bridge estimated corporate working capital of $45 million. Based on Iron Bridge’s most recent quarterly disclosure, that surplus swung to a deficit of approximately $2.2 million at March 31, 2018 with marginal corporate cash flow. The numbers don’t lie – any standalone plan for Iron Bridge will require significant financing, the availability and cost of which is highly uncertain and risky for a junior oil and gas company such as Iron Bridge.
  • The synergies Iron Bridge references in its Circular are only available to Iron Bridge in a combination with Velvet and this value is fully reflected in our 58% premium Offer. Velvet believes that a financially superior offer for Iron Bridge is highly unlikely.

CERTAINTY OF VALUE vs. UNCERTAIN FUTURE

  • Iron Bridge speaks of having financing “term sheets in-hand”, yet the Fairness Opinion by Iron Bridge’s financial advisor, which lists all documents they reviewed, mentions only “An indicative debt financing proposal received by Iron Bridge in May 2018”. If additional financing was indeed readily available, one would think that given the large capital spending requirements facing the Company, management would proactively execute a financing to avoid allowing available capital to decline to the current nominal unused capacity on its $5 million bank line.
  • Any debt financing, including debt convertible into equity, if achievable, would be costly given the risk profile of Iron Bridge and would represent a significant transfer of economic value (and potentially control) from shareholders to creditors, while debt servicing costs would seriously erode cash flow and margins.
  • Iron Bridge has yet to articulate a business plan inclusive of a tangible anti-dilutive and/or anti-debt burdening financing strategy. Moreover, its inability to even provide guidance for the second half of 2018 shows a lack of confidence in execution and a lack of transparency about the dispersion of results from its drilling program. Simply put, Iron Bridge is asking shareholders to blindly risk their investment.
  • Velvet’s all-cash Offer provides immediate returns and certainty of value; it also eliminates the risk of value transfer to other stakeholders at the expense of you – the independent shareholders.

NOTION OF SHAREHOLDER SUPPORT INCONSISTENT WITH AGM VOTING RESULTS

  • According to an Iron Bridge press release dated June 5, 2018, only 24% of the Company’s outstanding common shares were voted on the resolution to re-elect the current board of directors at the Company’s annual general meeting (“AGM”). Having only 24% of shares voted for the directors of a company at an AGM indicates that shareholders are at best not enthusiastic about the current direction of the company.
  • CEO Robert Colcleugh had the largest number of withheld votes at 27.55%. A large number of shareholders seemingly don’t agree with the current direction of the Company and are holding specific individuals accountable, namely the CEO, who is responsible for executing the strategy.
  • This year the median withheld vote for a CEO was ~1% for the Montney peer group, as defined in our circular, and less than 1% for the S&P/TSX Energy Sub Index. Iron Bridge’s CEO, at ~28% withheld, is the highest of any CEO in either group.
  • This vote apathy is inconsistent with Iron Bridge’s claims of support, and suggestions that the Offer cannot be successful are unfounded. Shareholders are reminded that the statutory minimum tender condition is 50%, after which point the board of directors and management of Iron Bridge could be replaced. We are confident in shareholders’ ability to judge the value of our Offer for themselves.

A FINANCIALLY SUPERIOR ALTERNATIVE TO THE STATUS QUO

Velvet is offering Iron Bridge shareholders a fully-valued all-cash offer that gives shareholders immediate liquidity against the backdrop of volatile markets and a very uncertain ability for Iron Bridge to execute on its business plan.

Under the terms of the Offer, Iron Bridge shareholders will receive $0.75 in cash for each common share of Iron Bridge held, representing an immediate 58% premium to the closing price of the Iron Bridge common shares on the TSX on May 11, 2018, the last trading day prior to the submission of Velvet’s offer letter to the Iron Bridge board of directors.

“Shareholders no longer need to endure poor operating results, a declining share price, and a leadership team that has no real plan to create value for shareholders. Iron Bridge’s AGM voting results suggest shareholders are keenly interested in a different choice than the status quo. We’re offering shareholders an opportunity to realize $0.75 cash for their investment in Iron Bridge common shares,” Mr. Woolner added.

LIMITED CONDITIONALITY

Velvet has the financial resources available to complete the Offer, and reminds Iron Bridge shareholders that the Offer is not subject to any due diligence condition. Velvet’s ability to complete the Offer and deliver certainty of value to Iron Bridge shareholders is reinforced by the very limited number of conditions to closing, which are customary for a transaction of this nature.

Velvet also reiterates to Iron Bridge shareholders, and has repeatedly made clear, that the Offer was made based on publicly-available information about Iron Bridge, and Velvet’s expertise in Iron Bridge’s areas of operations. Velvet categorically rejects any allegation that the Offer was informed by improperly-obtained confidential information, and views such allegations as a distraction from the significant financial merits reflected in the Offer.

TENDER YOUR SHARES TODAY

Consider the benefits, and take the simple steps needed to tender your Iron Bridge common shares to the Offer now. The Offer expires at 5:00 p.m. (Toronto time) on September 12, 2018. If you have any questions or require assistance, please contact Kingsdale Advisors, our Depositary and Information Agent, by telephone toll-free at 1-866-879-7650 with North America and at 1-416-867-2272 outside of North America or by e-mail at contactus@kingsdaleadvisors.com.

Visit velvetenergy.ca/ironbridgeoffer for more information and updates.

ADVISORS

Velvet has retained BMO Capital Markets as its exclusive financial advisor and Bennett Jones LLP as its legal counsel. Kingsdale Advisors is acting as strategic communications advisor and its Information Agent and Depositary.

INFORMATION AGENT

For additional information, including assistance in depositing Iron Bridge shares to the Offer, Iron Bridge shareholders should contact Kingsdale, toll-free in North America at 1-866-879-7650 or call collect outside North America at 1-416-867-2272 or by email at contactus@kingsdaleadvisors.com.

ABOUT VELVET

Velvet Energy Ltd. is a privately-held, full-cycle exploration and production company. Focused in the liquids-rich gas and light oil window of the Deep Basin of Alberta, the Company executes an organic growth business plan, including early land capture, technical evaluation, exploration and development of internally generated prospects. Headquartered in Calgary, Velvet has current production of approximately 24,000 boe per day and a focused land position consisting of over one million net undeveloped acres spanning from its core liquids-rich Ellerslie development in the greater Edson area to early phase Montney light oil exploration at Gold Creek.

IMPORTANT NOTICE

Certain statements contained in this news release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information can be generally identified by the use of words such as “anticipate”, “continue”, “estimate”, “expect”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar expressions. Specifically, forward-looking information in this news release includes statements respecting the Offer, including the benefits, results, effects and timing of any such transaction and the completion thereof, if at all. Forward-looking statements in this news release describe the expectations of Velvet as of the date hereof. These statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation, the ability to obtain regulatory approvals and meet the other conditions to any possible transaction. Although Velvet believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon.

For further information:

Ken Woolner
President and Chief Executive Officer
(403) 781-9134

Chris Theal
Chief Financial Officer
(403) 781-9162

Peter Henry
Vice President, Finance
(403) 781-9133

Media Contact:

Kingsdale Advisors
Ian Robertson, 416-867-2333
Executive Vice President, Communication Strategy
irobertson@kingsdaleadvisors.com
Cell: 647-621-2646

Velvet Energy Commences Previously Announced Premium All Cash Offer To Acquire Iron Bridge Resources; Issues Letter To Shareholders

CALGARY, Alberta, May 29, 2018 (GLOBE NEWSWIRE)

Velvet Energy Ltd. (“Velvet” or “We” or “Us”) announced today that, further to its press release of May 22, 2018, it has filed its Offer to Purchase and Circular (the “Circular”) on SEDAR and has formally commenced its all-cash offer (the “Offer”) to purchase all of the issued and outstanding common shares of Iron Bridge Resources Inc. (“Iron Bridge”) (TSX:IBR) for $0.75 per common share.

The fully-funded Offer represents a 58% premium to the closing price of the Iron Bridge common shares on the TSX on May 11, 2018 (the last trading day prior to the submission of Velvet’s offer letter to the Iron Bridge board of directors) and provides shareholders with immediate liquidity and certainty.

Notice and advertisement of the Offer was placed in the May 29, 2018 edition of the National Post and Le Devoir. The Circular will be mailed to all Iron Bridge shareholders. In conjunction with the Circular, Velvet is mailing a letter to shareholders detailing the benefits of the Offer and addressing several of the operational and financial difficulties plaguing Iron Bridge. A copy of the letter to shareholders is also included below.  Iron Bridge shareholders are urged to tender their shares early and in any case prior to the deadline on September 12, 2018 at 5:00 p.m. (Toronto time).  If you have questions or need help tendering your shares, contact Kingsdale Advisors at 1-866-879-7650 or at contactus@kingsdaleadvisors.com.  More information about the Offer is available at Kingsdale Advisors’ website.

Letter to Iron Bridge Shareholders

Dear Iron Bridge shareholder:

I, on behalf of Velvet Energy Ltd. (“Velvet“), want to take this opportunity to personally invite you to consider our fully-valued all-cash offer (the “Offer“) that gives you an opportunity to realize a significant premium and immediate liquidity for your investment in Iron Bridge Resources Inc. (“Iron Bridge“).

Velvet is making the Offer directly to you – the owners of Iron Bridge – to acquire all of the issued and outstanding common shares of Iron Bridge. Under the terms of the Offer, Iron Bridge shareholders will receive $0.75 in cash for each common share of Iron Bridge held, representing an immediate 58% premium to the closing price of the Iron Bridge common shares on the TSX on May 11, 2018, the last trading day prior to the submission of Velvet’s offer letter to the Iron Bridge board of directors.

We believe that the choice before you is clear:

  1. an opportunity to realize a significant 58% premium and immediate cash for your investment in Iron Bridge; or
  2. the status quo of shareholder value destruction evidenced by the 40% decline in the price of Iron Bridge common shares in the 12 months prior to our Offer.

Your company is at an inflection point given its exhausted cash resources and poor past capital allocation decisions – you can accept our 58% premium all-cash Offer or you can take the risk of attempting to raise dilutive capital in the face of uncertain and volatile markets.

Background of the offer

Velvet is a full-cycle exploration and production company focused in the liquids-rich window of the Deep Basin and light oil window of the Montney in Alberta.

An adjacent landowner to Iron Bridge’s mid-Montney land package, Velvet — as the natural acquirer of the land — approached Iron Bridge on March 9, 2018 with a view to negotiating a mutually agreeable transaction. Despite our repeated efforts over the subsequent months to discuss a shareholder value-maximizing transaction, over time it became clear that Iron Bridge would not constructively engage with us. As a result, we decided to bring our Offer directly to you, the owners of Iron Bridge.

Reasons to accept the offer

We believe that our fully-valued, premium Offer is compelling and represents a superior alternative to the risks of continuing to hold Iron Bridge common shares. As you make your decision, consider the following important facts regarding Velvet’s Offer:

Our Offer represents a significant premium to market price. The Offer represents a significant 58% premium to the closing price of the Iron Bridge common shares on the TSX on May 11, 2018, the last trading day prior to the submission of Velvet’s offer letter to the Iron Bridge board of directors.

Our Offer provides a premium valuation for Iron Bridge. The Offer represents a 2018 Enterprise Value (EV)/EBITDA multiple of 12.2x 2018 consensus EBITDA for Iron Bridge. This valuation represents a significant premium to Iron Bridge’s Montney peer group median consensus 2018 EV/EBITDA multiple of 6.6x.

Our Offer represents full value. The Offer factors the most recent results of Iron Bridge, execution shortfalls and a history of significantly underperforming market-announced production capacity. Iron Bridge’s often-referenced Net Asset Value (NAV) per share is simply not supportable, as you will read in the Offer to Purchase and Circular, which we have filed today.

Our all-cash Offer is fully-financed. Velvet has arranged fully-committed financing to complete the transaction, giving shareholders certainty of value and immediate liquidity in the face of volatile markets and significant uncertainty as to Iron Bridge’s ability to finance and execute its business plan.

The status quo is AN INFERIOR option

Shareholders should critically evaluate Iron Bridge’s ability to realize its claimed Net Asset Value (NAV) per share or any claims that remaining an Iron Bridge shareholder carries hidden or undervalued upside, or that the Offer in any way limits shareholder choice. While Velvet sees the value in Iron Bridge’s land package when combined with ours, we also see a company with poor operating results and financial performance, and great uncertainty in its ability to finance and execute its business plan.

Limited financing alternatives available. Iron Bridge’s valuations are based on potential future production that the company cannot finance. The company’s publicly disclosed NAV per share requires over $200 million of development capital (NPV10% before tax). Raising more than 2.2x the pre-Offer market capitalization will prove challenging for Iron Bridge in today’s energy sector, where access to, and the cost of, equity and debt financing is challenging, particularly for micro-cap issuers. Put another way, Iron Bridge cannot raise the capital it needs without significant dilution or increased debt servicing costs. These are costs directly borne by you, the shareholders.

An unsustainable cost structure. Iron Bridge’s general and administrative expense was $9.54/boe or more than 30% of cash costs in the first quarter of 2018 – significantly higher than the Montney peer median of $1.41/boe.

Exhausted cash resources. Based on Iron Bridge’s most recent quarterly disclosure, marginal operating cash flows and heavy capital expenditures have fully consumed net working capital, which declined from a surplus of approximately $40.7 million at September 30, 2017, to a surplus of approximately $21.7 million at December 31, 2017, to a deficit of approximately $2.2 million at March 31, 2018.

Problematic land geometry. Iron Bridge’s land geometry relative to neighboring land blocks is fragmented and in places completely surrounded. This does not allow for long-reach horizontal wells to be optimally situated, meaning future wells will be sub-optimal from a geological perspective and by extension will continue to constrain return on capital. Velvet’s offsetting land position can remedy these geometrical constraints. Importantly, the value of this synergy is fully reflected in Velvet’s significant 58% premium, all-cash Offer. If Iron Bridge were to continue to develop its acreage with suboptimal wells, Iron Bridge’s assets may become less valuable to Velvet or other acquirers in the future.

Velvet believes that, if the Offer is not successful, it is likely that the price of Iron Bridge’s common shares will decline to pre-Offer levels or lower.

Rejecting Velvet’s fully-funded Offer involves a future with real risk; accepting our Offer involves certainty of an all-cash, fully-valued premium Offer.

The time to act is now: Tender your shares today

Consider the benefits, and take the simple steps needed to tender your Iron Bridge common shares to the Offer now. The Offer expires at 5:00 p.m. (Toronto time) on September 12, 2018. If you have any questions or require assistance, please contact Kingsdale Advisors, our Depositary and Information Agent, by telephone toll-free at 1-866-879-7650 with North America and at 1-416-867-2272 outside of North America or by e-mail at contactus@kingsdaleadvisors.com. We hope you will accept our significant premium all-cash offer.

Sincerely,

(signed)

Ken Woolner
President and Chief Executive Officer

Advisors

Velvet has retained BMO Capital Markets as its exclusive financial advisor. Kingsdale Advisors is acting as strategic communications advisor and its Information Agent and Depositary.

Information Agent

For additional information, including assistance in depositing Iron Bridge shares to the Offer, Iron Bridge shareholders should contact Kingsdale, toll-free in North America at 1-866-879-7650 or call collect outside North America at 1-416-867-2272 or by email at contactus@kingsdaleadvisors.com.

About Velvet

Velvet Energy Ltd. is a privately-held, full-cycle exploration and production company. Focused in the liquids-rich gas and light oil window of the Deep Basin of Alberta, the Company executes an organic growth business plan, including early land capture, technical evaluation, exploration and development of internally generated prospects. Headquartered in Calgary, Velvet has current production of approximately 22,000 boe per day and a focused land position consisting of over one million net undeveloped acres spanning from its core liquids-rich Ellerslie development in the greater Edson area to early phase Montney light oil exploration at Gold Creek.

Important Notice

Certain statements contained in this news release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information can be generally identified by the use of words such as “anticipate”, “continue”, “estimate”, “expect”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar expressions. Specifically, forward-looking information in this news release includes statements respecting the Offer, including the benefits, results, effects and timing of any such transaction and the completion thereof, if at all. Forward-looking statements in this news release describe the expectations of Velvet as of the date hereof. These statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation, the ability to obtain regulatory approvals and meet the other conditions to any possible transaction. Although Velvet believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon.

For further information:              

Ken Woolner
President and Chief Executive Officer
(403) 781-9134

Chris Theal
Chief Financial Officer
(403) 781-9162

Peter Henry
Vice President, Finance
(403) 781-9133

Media Contact:

Kingsdale Advisors
Ian Robertson, 416-867-2333
Executive Vice President, Communication Strategy
irobertson@kingsdaleadvisors.com
Cell: 647-621-2646

Velvet Energy Announces Premium All Cash Offer to Acquire Iron Bridge Resources

CALGARY, Alberta, May 22, 2018 (GLOBE NEWSWIRE)

Velvet Energy Ltd. (“Velvet” or “We” or “Us”) announced today that it intends to commence an offer (the “Offer”) to acquire all of the issued and outstanding common shares (the “Common Shares”) of Iron Bridge Resources Inc. (TSX:IBR) (“Iron Bridge”).

Under the terms of the Offer, Velvet proposes to acquire all of the issued and outstanding Common Shares of Iron Bridge for $0.75 in cash per Common Share. This represents a 58% premium to the closing price of Iron Bridge Common Shares on the TSX on May 11, 2018, the last trading day prior to Velvet submitting an offer letter to Iron Bridge’s board of directors (the “Iron Bridge Board”) on May 13, 2018, and a 45% premium to the 20-day volume weighted average trading price of Iron Bridge Common Shares on the TSX for the period ended May 18, 2018. The Offer values Iron Bridge at an enterprise value of approximately $120 million, which implies a multiple of 12.2x Iron Bridge’s 2018 consensus EBITDA.

Since the submission of our offer letter to the Iron Bridge Board on May 13, 2018, Velvet has repeatedly attempted to engage with the Iron Bridge Board and management to explore a value maximizing transaction for Iron Bridge shareholders. Iron Bridge asked Velvet to execute a confidentiality agreement with a standstill. Given Velvet’s significant industry knowledge and expertise in Iron Bridge’s area of operations, we do not require access to confidential information. Further, maintaining the ability to take our Offer directly to Iron Bridge shareholders was important given the Iron Bridge Board has refused to constructively engage with Velvet about a fully-funded all-cash transaction which provides Iron Bridge shareholders the opportunity to realize a significant premium and liquidity at a very attractive fundamental valuation.

In the face of the Iron Bridge Board denying Iron Bridge shareholders the ability to decide for themselves as to the merits of the Offer, we have decided to make the Offer directly to Iron Bridge shareholders, the owners of the company.

REASONS TO ACCEPT THE OFFER

We believe that our Offer is compelling, and represents a clearly superior alternative to the course set by the Iron Bridge Board and management, for the following reasons:

  • Significant Premium to Market Price. The Offer represents a significant 58% premium to the closing price of the Iron Bridge Common Shares on the TSX on May 11, 2018, the last trading day prior to the submission of our offer letter to the Iron Bridge Board. The Offer also represents a premium of 45% to the 20-day volume weighted average trading price of the Iron Bridge Common Shares on the TSX for the period ended May 18, 2018.
  • Premium Valuation for Iron Bridge. The Offer represents a 2018 EV/EBITDA multiple of 12.2x 2018 consensus EBITDA for Iron Bridge. This valuation represents a significant premium to Iron Bridge’s Montney peer group median consensus 2018 EV/EBITDA multiple of 6.6x.
  • 100% Liquidity and Certainty of Value. The Offer provides 100% cash consideration for Iron Bridge Common Shares, giving Iron Bridge shareholders certainty of value and immediate liquidity in the face of volatile markets and significant uncertainty as to Iron Bridge’s ability to finance and execute its business plan.
  • Fully Financed Cash Offer. Velvet’s board has approved the Offer and has arranged fully committed financing to complete the transaction.
  • Iron Bridge has Insufficient Liquidity. Based on Iron Bridge’s most recent quarterly disclosure, marginal operating cash flows and heavy capital expenditures fully consumed net working capital, declining from a surplus of ~$21.7 million at December 31, 2017 to a deficit of ~$2.2 million at March 31, 2018. With a credit facility borrowing limit of only $5 million, this leaves Iron Bridge with only $2.0 million of liquidity to fund future development of its asset base.
  • Iron Bridge has an Unsustainable Cost Structure. Iron Bridge’s cash expenses, adjusted for one-time cost recoveries, were $29.33/boe in the first quarter of 2018 – approximately equal to revenue of $29.99/boe resulting in marginal funds flow. Iron Bridge’s G&A expense was $9.54/boe or more than 30% of cash costs – significantly higher than their Montney peer median of $1.41/boe.
  • Iron Bridge has Limited Financing Alternatives Available. With insufficient liquidity and a current cash flow outspend, Iron Bridge will need to access external sources of financing. Iron Bridge’s publicly disclosed net asset value requires over $200 million of future development capital. Raising this capital will prove challenging for Iron Bridge in today’s energy sector, where access to public equity and debt financing is limited. Velvet understands the value of Iron Bridge’s assets given its own operations in the area and the Offer represents a compelling valuation that could not be realized in the current public market environment.
  • Iron Bridge has made Misguided Capital Allocation Decisions. On November 20, 2017, Iron Bridge commenced a share repurchase program. Given the capital intensity of horizontal, multi-fracturing technology, Iron Bridge’s early stage of delineation and limited capital resources, Iron Bridge should be focused on prioritizing capital to its land base.
  • Iron Chain Technology Corp. is a Distraction. Cryptocurrency mining is an untested business and adds an additional layer of risk to an already volatile market environment. It also presents transparency challenges for stock valuation. Shareholder capital should be focused on developing Iron Bridge’s Elmworth Assets and associated infrastructure.

SHAREHOLDERS, THE TIME FOR ACTION IS NOW

As fiduciaries of the company, the Iron Bridge Board and management should have engaged with Velvet to pursue an attractive opportunity to unlock shareholder value.

The Iron Bridge Board’s failure to engage with Velvet has forced us to bring the Offer directly to you, the shareholders and owners of the company. However, unless the Iron Bridge Board agrees to shorten the bid period, the Offer must remain open for at least 105 days. It is within the Iron Bridge Board’s power to shorten the minimum bid period to 35 days.

There is no reason to delay shareholders’ ability to accept the Offer. In today’s capital-constrained environment, there is limited upside to holding Iron Bridge shares given the short runway the company has to pursue its growth plans. Shareholders are encouraged to contact members of the Iron Bridge Board and management team to make their views known.

Shareholders who have additional questions about the Offer or who need assistance in tendering their shares are encouraged to contact the information agent for the Offer, Kingsdale Advisors at the numbers below.

The Offer

The Offer will be made for all of the issued and outstanding Common Shares of Iron Bridge. Full details of the Offer will be included in the formal offer and take-over bid circular to be mailed to Iron Bridge shareholders. Velvet expects to formally commence the Offer and mail the offer and circular to Iron Bridge shareholders in the following days. The take-over bid circular will be filed on SEDAR at www.sedar.com.

The Offer will be subject to customary conditions including, without limitation, the deposit under the Offer of Common Shares representing at least 66 2/3% of outstanding Common Shares, receipt of all necessary regulatory approvals, and no material adverse change in Iron Bridge. The Offer will not be subject to the approval of Velvet’s shareholders and is not subject to any financing or due diligence conditions.

Under applicable Canadian securities laws, the Offer will initially be open for acceptance for a minimum of 105 days from the date of commencement, subject to the ability of Velvet to shorten the deposit period in certain circumstances, provided that the minimum deposit period can never be less than 35 days from the date of the Offer. The Offer is subject to a non-waivable condition that more than 50% of the outstanding Common Shares, excluding those Common Shares beneficially owned, or over which control or direction is exercised, by Velvet or by any person acting jointly or in concert with Velvet, shall have been validly deposited and not withdrawn. The Offer will be extended for a period of not less than 10 days after Velvet first takes up shares under the Offer, assuming the minimum bid conditions are met.

Advisors

Velvet has retained BMO Capital Markets as its exclusive financial advisor. Kingsdale Advisors is acting as strategic communications advisor and Information Agent and Depositary.

Information Agent

For additional information, including assistance in depositing Iron Bridge shares to the Offer, Iron Bridge shareholders should contact Kingsdale, toll free in North America at 1-866-879-7650 or call collect outside North America at 1-416-867-2272 or by email at contactus@kingsdaleadvisors.com.

About Velvet

Velvet Energy Ltd. is a privately-held, full-cycle exploration and production company. Focused in the liquids-rich gas and light oil window of the Deep Basin of Alberta, the Company executes an organic growth business plan, including early land capture, technical evaluation, exploration and development of internally generated prospects. Headquartered in Calgary, Velvet has current production of approximately 22,000 boe per day and a focused land position consisting of over one million net undeveloped acres spanning from its core liquids-rich Ellerslie development in the greater Edson area to early phase Montney light oil exploration at Gold Creek.

Important Notice

Certain statements contained in this news release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information can be generally identified by the use of words such as “anticipate”, “continue”, “estimate”, “expect”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar expressions. Specifically, forward-looking information in this news release includes statements respecting the Offer, including the benefits, results, effects and timing of any such transaction and the completion thereof, if at all. Forward-looking statements in this news release describe the expectations of Velvet as of the date hereof. These statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation, the ability to obtain regulatory approvals and meet the other conditions to any possible transaction. Although Velvet believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon.

For further information:

Ken Woolner
President and Chief Executive Officer
(403) 781-9134

Chris Theal
Chief Financial Officer
(403) 781-9162

Peter Henry
Vice President, Finance
(403) 781-9133

www.velvetenergy.ca
@VelvetEnergyLtd.
investors@velvetenergy.ca

Media Contact:

Kingsdale Advisors
Ian Robertson
Executive Vice President, Communication Strategy
W: (416) 867-2333
C: (647) 621-2646
irobertson@kingsdaleadvisors.com

Velvet Energy Ltd. Announces US$125 Million Senior Secured Second Lien Note Financing and an Accelerated 2017 Ellerslie Development Program

Calgary, AB (Marketwired - October 05, 2016)

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Velvet Energy Ltd. (the “Company” or “Velvet”), a private oil and liquids-rich natural gas producer in the Deep Basin of Alberta, is pleased to announce that it has completed a private placement (the “Financing”) of US$125 million of Senior Secured Second Lien Notes due 2023 (the “Notes”). The Company is also pleased to provide an update on its core Edson Ellerslie program and plans for advancing key exploration initiatives.

On October 5, 2016, Velvet placed US$125 million of Notes with funds advised by FS Investments and sub-advised by GSO Capital Partners LP, and certain investment funds managed by CI Investments Inc. Proceeds of the Financing will be used to temporarily pay down existing bank indebtedness and to fund an expanded Edson Ellerslie development program. Following with the Financing, the Company plans to draw C$30 million on its equity line led by its private equity investors (the “Private Equity Line”) to continue to advance early stage exploration initiatives. The terms of Velvet’s C$165 million syndicated credit facility remain unchanged after giving effect to this Financing.

Accelerating Activity in Our High Return Base Business

Ken Woolner, President & CEO, stated, “We are very pleased to have partnered with two world-class institutional investors. The Financing, combined with continued access to the Private Equity Line and syndicated bank debt, is a testament to the value of our core Edson Ellerslie assets and provides Velvet with excellent liquidity to advance our business plan in what remains a very challenging capital markets environment. This Financing, along with funds from operations, will allow us to accelerate the pace of our Edson Ellerslie development program in 2017. Thanks in large part to our team’s diligence in reducing both capital and operating expenses in the play, we generate half cycle rates of return in excess of 50 percent at current strip prices.”

Velvet controls over 425 net sections of land in the Edson fairway, and has identified over 600 net drilling locations in the Ellerslie and Deep Basin stack, providing over 10 years of low risk, low cost, high rate of return growth.

RBC Capital Markets acted as an agent in connection with the placement of Senior Secured Second Lien Notes.

Advancing Our Exploration Initiatives

Velvet continues to advance several early stage exploration projects and will allocate proceeds from the Private Equity Line to continue to capture opportunities and derisk play concepts. The Company plans to allocate a portion of the equity proceeds from the drawdown on its Private Equity Line to ongoing exploration activity in the Montney oil window at Gold Creek.

About Velvet Energy Ltd.

Velvet Energy Ltd. is a full cycle, exploration and development company. Since inception, 80% of corporate production has been achieved via the drill bit in the Edson Ellerslie fairway. The company is acutely focused on controlling costs through the entire value chain to achieve top decile rates of return on its capital employed. Velvet is headquartered in Calgary and is backed by three institutional private equity firms in New York, namely Warburg Pincus, Trilantic Capital Partners and 1901 Partners Management LP.

About Warburg Pincus L.L.C.

Warburg Pincus L.L.C. is a leading global private equity firm focused on growth investing. The firm has more than $40 billion in assets under management. The firm’s active portfolio of more than 120 companies is highly diversified by stage, sector and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 15 private equity funds, including a $4 billion energy fund that closed in October 2014, which have invested more than $58 billion in over 760 companies in more than 40 countries.

For more than two decades, Warburg Pincus has invested or committed over $9.5 billion across more than 50 energy investments around the world involved in oil and gas exploration and production, midstream, power generation, oilfield technology and related-services, mining and alternative energy development. Notable investments include Antero Resources, Bill Barrett Corporation, Broad Oak Energy, Encore Acquisition Company, Kosmos Energy, Laredo Petroleum, MEG Energy, Newfield Exploration, Spinnaker Exploration and Targa Resources.

The firm is headquartered in New York with offices in Amsterdam, Beijing, Hong Kong, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai and Singapore. For more information please visit www.warburgpincus.com.

About Trilantic Capital Partners

Trilantic North America is a private equity firm focused on control and significant minority investments in North America. Trilantic North America’s primary investment focus is in the business services, consumer, energy and financial services sectors. To date, Trilantic North America’s energy team has committed approximately $3.2 billion in capital across 24 energy investments. As of June 30, 2016, Trilantic North America currently manages four private equity funds with aggregate capital commitments of $5.9 billion. For more information, visit www.trilantic.com.

About 1901 Partners Management, LP

1901 Partners Management, LP, is a privately held investment adviser formed in 2014 to provide management and advisory services to its clients with respect to oil and gas and other energy-related investments.

*This press release is not an offer of securities for sale in the United States. The securities of Velvet may not be offered or sold in the United States absent registration or an exemption from registration. The securities of Velvet will not be publicly offered in the United States. The securities of Velvet have not been or will not be registered under the U.S. Securities Act or any state security laws.

ADVISORY REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

This press release contains forward-looking statements and forward-looking information (collectively, “forward-looking statements”) within the meaning of applicable securities laws. The use of any of the words “will”, “expects”, “believe”, “plans”, “potential” and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this press release contains forward looking statements relating to: use of proceeds from the Financing; the proposed draw on the Private Equity Line; rates of return on the Company’s assets; prospective drilling locations; future amounts drawn on our credit facility; our plans with respect to reinvestment and drilling plans; management’s assessment of Velvet’s future strategy; plans, opportunities and operations; future funds from operations; rates of return; and other financial results, the timing, allocation and efficiency of Velvet’s capital program and the results therefrom, anticipated potential and growth opportunities associated with Velvet’s asset base and industry conditions. By their nature, forward-looking statements are based upon certain assumptions and are subject to numerous risks and uncertainties, some of which are beyond Velvet’s control, including the satisfaction of the closing conditions to the proposed drawdown on the Company’s private equity line, the impact of general economic conditions, industry conditions, current and future commodity prices, currency and interest rates, future royalties, future operating costs, the imprecision of reserve estimates, the performance of existing wells, the success obtained in drilling new wells, the sufficiency of budgeted capital expenditures in carrying out planned activities, competition from other industry participants, availability of qualified personnel or services and drilling and related equipment, stock market volatility, effects of regulation by governmental agencies including changes in environmental regulations, tax laws and royalties; the ability to access sufficient capital from internal sources and bank and equity markets. This press release also contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about our prospective results of operations, debt levels and funds from operations, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI and forward-looking statements. Velvet’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and FOFI, or if any of them do so, what benefits Velvet will derive therefrom. Velvet has included the forward-looking statements and FOFI in this press release in order to provide readers with a more complete perspective on Velvet’s future operations and such information may not be appropriate for other purposes. Velvet disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. DRILLING LOCATIONS ADVISORY: This press release discloses drilling locations in two categories: (i) booked locations; and (ii) unbooked locations. Booked locations are proved locations and probable locations derived from the Company’s most recent independent reserves evaluation as prepared by GLJ Petroleum Consultants Ltd. as of September 30, 2015 and account for drilling locations that have associated proved and/or probable reserves, as applicable. Of the 600 net drilling locations identified herein, 36 are proved locations, 43.5 are probable locations and 520.5 are unbooked locations. Unbooked locations are internal estimates based on prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the Company will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations, the majority of other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.

Velvet Energy Ltd. Announces Incremental $100 Million Investment

Calgary, Alberta January 29, 2015

Equity Commitment to Fund Acquisitions and Growth

Calgary, Alberta January 29, 2015 — Velvet Energy Ltd. (“Velvet Energy” or the “Company”), an oil and gas exploration and production company focused on the Western Canadian Sedimentary Basin (“WCSB”), today announced that it has obtained an incremental $100 million equity line led by its private equity investors Warburg Pincus L.L.C., Trilantic Capital Partners and ZAM Ventures, L.P.

Velvet Energy utilizes advanced drilling and completion technologies to explore for and develop oil and gas assets within established plays in West-Central Alberta, Canada. Velvet is currently producing approximately 14,000 barrels per day equivalent (“boe/d”) from its footprint in the Edson area of West-Central Alberta where it is achieving superior field-level economics. This incremental equity line will enable the Company to build on its success to date, through the pursuit of acquisitions and additional growth and corporate development opportunities.

“Velvet Energy is operationally and financially well positioned with a high-quality asset base, strong balance sheet, and three sophisticated and supportive investors, led by Warburg Pincus”, commented Ken Woolner, President and Chief Executive Officer, Velvet Energy. “The access to significant capital resources allows Velvet Energy to take advantage of the current market conditions to continue to efficiently grow its production base and its opportunity set”.

This commitment follows an initial equity line totalling $336 million that has been fully deployed by Velvet Energy.

About Velvet Energy

Velvet Energy is a privately-held oil and gas exploration and production company with corporate headquarters in Calgary, Alberta and operations headquartered in Edson, Alberta. From start-up in 2011, Velvet Energy has successfully pursued a counter-cyclical business plan with a primary emphasis towards sweet liquids-rich natural gas. The Company has constructed a focused land position consisting of 412,000 net acres in the Edson area of Alberta, in order to achieve long term sustainable growth through the drill bit, and is currently targeting medium term (18 month) production of 20,000 boe/d.

For more information, visit www.velvetenergy.net or contact Velvet Energy at info@velvetenergy.net or at (403) 781-9125.

About Warburg Pincus L.L.C.

Warburg Pincus L.L.C. is a leading global private equity firm focused on growth investing. The firm has more than $37 billion in assets under management. The firm’s active portfolio of more than 120 companies is highly diversified by stage, sector and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 14 private equity funds, including a $4 billion energy fund that closed in October 2014, which have invested more than $50 billion in over 720 companies in more than 35 countries.

For more than two decades, Warburg Pincus has invested or committed over $9.5 billion across more than 50 energy investments around the world involved in oil and gas exploration and production, midstream, power generation, oilfield technology and related-services, mining and alternative energy development. Notable investments include Antero Resources (NYSE: AR), Bill Barrett Corporation (NYSE: BBG), Broad Oak Energy, Encore Acquisition Company, Kosmos Energy (NYSE: KOS), Laredo Petroleum (NYSE: LPI), MEG Energy (TSX: MEG), Newfield Exploration (NYSE: NFX), Spinnaker Exploration and Targa Resources (NYSE: TRGP, NGLS).

The firm is headquartered in New York with offices in Amsterdam, Beijing, Frankfurt, Hong Kong, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo and Shanghai. For more information please visit www.warburgpincus.com.

About Trilantic Capital Partners

Trilantic Capital Partners is a private equity firm focused on control and significant minority investments in North America and Europe, with a primary investment focus in North America in the business services, consumer, energy and financial services sectors. Trilantic manages six institutional private equity funds with aggregate capital commitments of more than $7.0 billion. To date, Trilantic has committed more than $2.5 billion to the energy sector across twenty platform investments. For more information visit www.trilantic.com.

About ZAM Ventures, L.P.

ZAM Ventures, L.P. is one of the main investment vehicles for Ziff Brothers Investments, L.L.C., a multi-billion dollar family investment firm, headquartered in Manhattan, New York that invests in a variety of global asset classes. ZAM Ventures, L.P. focuses on energy-related private equity projects.

Velvet Energy Ltd. Announces Investors

CALGARY, Alberta, June 1, 2011

CALGARY, Alberta, June 1, 2011 /PRNewswire/ — Velvet Energy Ltd. (“Velvet Energy” or the “Company”), a newly formed oil and gas exploration and production company focused on the Western Canadian Sedimentary Basin (“WCSB”), today announced that Warburg Pincus, Trilantic Capital Partners (“Trilantic”), ZAM Ventures, L.P. (“ZAMV”), members of management and select Board members, have agreed to make an investment in the Company.

Velvet Energy Ltd. is led by Ken Woolner, a geological engineer by training, and an entrepreneur with a successful track record in the oil and gas industry spanning over 20 years. The Company plans to utilize advanced drilling and completion technologies to enhance production and returns in established areas of western Alberta.

Commenting on the announcement, Ken Woolner, CEO, Velvet Energy said, “We are delighted to be joined in this venture by Warburg Pincus, Trilantic Capital Partners and ZAM Ventures, L.P., and look forward to benefiting from the deep oil and gas experience these investing partners bring to the table. We are excited by the opportunity to leverage new technologies to enhance returns in mature conventional plays, and revitalize formerly marginal plays, in western and central Alberta.”

On behalf of the investors, David Krieger, Managing Director, Warburg Pincus said, “We are pleased to be partnering with this proven management team, and look forward to working with the company as it explores and develops oil and gas resources in the Western Canadian Sedimentary Basin.”

CIBC World Markets Inc. acted as financial advisor to Velvet Energy Ltd. with respect to this financing.

Careers

We’re always looking for talented people to join our team. At Velvet, we value our employees and recognize them as the driving force behind our success.

Contact

We are located in the downtown core in Calgary, but you can keep up with what is happening at Velvet by following us on LinkedIn or Twitter.

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