TORC oil and gas announces strategic acquisition in southeast Saskatchewan

ALBERTA – TORC Oil & Gas Ltd. is pleased to announce that it has entered into an agreement to acquire high quality, light oil assets which are complementary to TORC’s existing assets in southeast Saskatchewan. The strategic acquisition (the “Acquisition”) includes 4,750 boepd (~98% light oil and liquids) of low decline, high netback, light oil producing assets in southeast Saskatchewan and Manitoba (the “Acquired Assets”). In addition, the Acquired Assets include ownership of freehold mineral title on more than 80 net sections of land in southeast Saskatchewan. Total consideration for the Acquisition is US$430 million, payable in cash. In conjunction with the Acquisition, TORC’s cornerstone investor, the Canadian Pension Plan Investment Board (“CPPIB”), has committed to invest up to a maximum of US$149,985,000 through a private placement of subscription receipts (the “CPPIB Investment”). Additionally, TORC has entered into an agreement for a US$250,480,000 bought deal prospectus offering of subscription receipts (the “Bought Deal Financing” and together with the CPPIB Investment, the “Financings”) offered through a syndicate of underwriters (the “Underwriters”) as described below, for total gross equity proceeds of US$400,465,000. The Acquisition and Financings further strengthen TORC’s business model which is focused on delivering disciplined growth and a sustainable dividend to shareholders. THE ACQUISITION Pursuant to a purchase and sale agreement (the “Agreement”) with an independent Canadian oil and gas company, dated April 26, 2015, TORC has agreed to acquire the Acquired Assets for cash consideration of US$430 million, prior to customary closing adjustments. The Acquired Assets are complementary to TORC’s existing operations in southeast Saskatchewan and provide operating and strategic synergies. Included in the Acquired Assets are 80 net sections of fee title lands which are located in areas with increasing industry activity in southeast Saskatchewan. The undeveloped portion of the fee title acreage, in conjunction with 40,000 net acres of additional undeveloped land and significant proprietary seismic data being acquired in this transaction, has been conservatively valued by TORC at US$85 million. The effective date of the Acquisition is May 1, 2015 with closing expected in June 2015. The Acquisition is consistent with TORC’s strategy to capitalize on opportunities to enhance the quality of its asset base throughout the commodity price cycle. The Acquisition is accretive to TORC on a reserves, production and cash flow per share basis. The Acquired Assets are 98% light oil and liquids and have an average decline rate of approximately 20%, providing a dependable free cash flow stream. Additionally, TORC has identified approximately 170 (net) high quality light oil drilling locations on the Acquired Assets, which are expected to provide some of the highest relative economic returns in the Western Canadian Sedimentary Basin in all commodity price environments. The Acquisition will improve TORC’s decline profile, operating netback and light oil drilling inventory further strengthening TORC’s disciplined growth plus sustainable dividend business model. With TORC having a long history operating properties in the area, integration and go forward operations are anticipated to be seamless