Legacy Oil + Gas Press Release

Link to Crescent Point release

Legacy Oil + Gas Inc. (LEG.TO) (“Legacy” or the “Company”) is pleased to announce that it has entered into an arrangement agreement (the “Arrangement Agreement”) with Crescent Point Energy Corp. (“Crescent Point”), pursuant to which Crescent Point has agreed to acquire all of the issued and outstanding common shares of Legacy (“Legacy Shares”) on the basis of 0.095 of a common share of Crescent Point (“Crescent Point Shares”) for each Legacy Share held (the “Transaction”).

The consideration offered under the Transaction reflects a value of approximately $2.85 per Legacy Share based on Crescent Point’s closing price of $30.00 on May 25, 2015, representing a 4.6% premium over the 30 trading day volume weighted average trading price of the Legacy Shares and a 24.5% premium over the 60 trading day volume weighted average trading price of the Legacy Shares. The Transaction implies a value of approximately $1.53 billion for Legacy after taking into account the assumption of Legacy’s net debt, the payment of transaction costs and the post-closing payout of Legacy’s senior unsecured notes. The Company’s current production is approximately 22,000 Boe per day and independently evaluated proven plus probable reserves as of December 31, 2014 were 154.1 MMBoe.


Since its inception in July 2009, Legacy has assembled and de-risked an enviable and difficult to replicate suite of high quality, light oil assets and production with an associated significant development drilling inventory and waterflood potential. Legacy has been a leader and innovator in tight oil development, increasing production rates and recoveries and reducing costs across its asset base. The Company’s conventional and resource plays have provided a strong foundation for Legacy’s demonstrated reserves, production and cash flow per share growth over the past five years.

One of the Legacy’s significant achievements has been the SE Saskatchewan Midale resource play. A pioneer in the origination, evolution and consolidation of this exciting, highly economic light oil resource play, Legacy dominates the Midale resource play from a technical expertise, production and upside exposure perspective. Legacy controls more than 200 net sections of land in this play and has made a significant investment in extensive gathering and processing infrastructure.

With the precipitous drop in oil prices beginning in July 2014, Legacy’s valuation has come under pressure. The Company’s financial leverage, which was improving in the first half of 2014, also began to erode, putting additional pressure on Legacy’s share price. In response to the market conditions, Legacy’s Board of Directors initiated a comprehensive process in February 2015, with the assistance of co-financial advisors FirstEnergy Capital Corp. and GMP Securities L.P., to evaluate asset sales, business combinations and other opportunities designed to unlock shareholder value.

The process culminated with the Board of Directors recommending the Transaction with Crescent Point, which was determined to offer Legacy’s shareholders the greatest opportunity to recognize the long term value inherent in Legacy’s assets through a better capitalized combined entity, with a well-funded capital plan, stronger balance sheet and reliable dividend.

Strategic Rationale

Legacy’s strategy of controlling large light oil in-place pools with significant development drilling inventory and waterflood potential fits well with Crescent Point’s strategy. Both companies have been leaders in tight oil development and share a common resource development philosophy regarding both drilling and waterflood perspectives.

Legacy’s Board of Directors believe that the Company’s high quality asset base can be more effectively developed in the larger, better capitalized combined entity, on a risk adjusted basis. Legacy’s SE Saskatchewan production and infrastructure complement Crescent Point’s assets in the area, while the Transaction provides Legacy shareholders exposure to exciting development upside in Crescent Point’s Shaunavon, Bakken, Torquay and Uinta Basin assets.

The combined entity will have a strong balance sheet that is bolstered by Crescent Point’s comprehensive three and a half year hedging program. Furthermore, through Crescent Point, Legacy shareholders will receive a monthly dividend that has not been reduced since its inception in 2003.

The Arrangement Agreement

The Arrangement Agreement provides for the implementation of the Transaction by means of a plan of arrangement under the Business Corporations Act (Alberta). The Arrangement Agreement contains customary representations and warranties of each party, non-solicitation covenants by Legacy and right to match provisions in favour of Crescent Point. Pursuant to the Arrangement Agreement, a non-completion fee of $45 million will be payable by Legacy in certain circumstances, including if Legacy enters into an agreement with respect to a superior proposal or if the Board of Directors of Legacy withdraws or modifies its recommendation with respect to the Transaction.

The Transaction is subject to customary conditions for a transaction of this nature, which include court and regulatory approvals (including the Toronto Stock Exchange and the New York Stock Exchange), and the approval of 66 2/3 percent of the votes cast by Legacy shareholders represented in person or by proxy at a meeting of Legacy shareholders to be called to consider the Transaction (the “Meeting”) and a majority of the votes cast by Legacy shareholders, represented in person or by proxy at the Meeting, after excluding the votes cast by those persons whose votes may not be included in determining minority approval of a business combination pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transaction.

An information circular regarding the Transaction and the annual business of Legacy is expected to be mailed to shareholders of Legacy in early June 2015 with the Meeting expected to take place on June 30, 2015. Closing of the Transaction is expected to occur shortly thereafter.

A copy of the Arrangement Agreement will be filed on Legacy’s SEDAR profile and will be available for viewing at www.sedar.com.

Financial Advisors and Fairness Opinions

FirstEnergy Capital Corp. and GMP Securities L.P. are acting as co-financial advisors to the Board of Directors of Legacy. TD Securities Inc. is acting as financial advisor to the independent committee of the Board of Directors of Legacy. Each advisor has provided its verbal opinion that, subject to their review of the final form of the documents affecting the Transaction, the consideration to be received by Legacy shareholders pursuant to the terms of the Transaction is fair, from a financial point of view, to the Legacy shareholders (collectively, the “Fairness Opinions”).

Recommendation of the Board of Directors

After considering, among other things, the Fairness Opinions, the recommendation of the independent committee of the Board of Directors of Legacy and other relevant matters, the Board of Directors of Legacy has unanimously determined that the Transaction is in the best interests of Legacy and unanimously recommends that the Legacy shareholders vote in favour of the Transaction.

All directors and officers of Legacy and certain funds managed by KERN Partners Ltd. have entered into voting support agreements with Crescent Point pursuant to which they have agreed, among other things, to vote their Legacy Shares in favour of the Transaction, subject to certain permitted exceptions.

Legacy is a Calgary, Alberta based company actively engaged in the business of oil and gas exploration, development, acquisition and production in the provinces of western Canada and in the State of North Dakota whose Legacy Shares are traded on the Toronto Stock Exchange under the trading symbol “LEG”.

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