DNO to Make Offer for Calvalley

Norwegian firm DNO International ASA reported that it intends to make an all-cash offer, through an acquisition entity, to acquire Canadian firm Calvalley Petroleum Inc. at a price of CAD 2.30 per Class A common share. The offer represents a premium of approximately 60% to the CAD 1.43 closing price of Calvalley Shares on the TSX on July 4. The proposed transaction represents a market capitalization value of approximately CAD 215 million.

"This offer provides Calvalley shareholders with significant, immediate and certain value for the company's existing assets, as well as recognizing its future growth potential," said Bijan Mossavar-Rahmani, DNO International's executive chairman. "We also believe our own shareholders and other stakeholders would be very well-served by the combination of these two businesses."

"For DNO International, this transaction is complementary to our existing Yemen asset base and fits well with our strategy of continuing to build a balanced portfolio of production, development and exploration assets in the Middle East and North Africa," said Mossavar-Rahmani. "We believe the combination of Calvalley’s portfolio and DNO International's operational capabilities and strong balance sheet position us to enhance value in Yemen through increased production and reserves."

Calvalley's principal assets and operations relate to its 50% working interest in the PSA for Block 9, which consists of a 2,234 sq km area within Yemen’s prolific Sayun-Masila Basin. The acquisition will also give DNO its first stake in Ethiopia, as Calvalley holds a 100% working interest in a PSA for the Metema and Gimbi blocks covering a total area of 46,470 sq km.

The all-cash offer will not be subject to any financing condition. Macquarie Capital is DNO International's financial advisor and Stikeman Elliott LLP is DNO International's legal advisor.

DNO International first approached Calvalley in late-May with the aim of reaching a negotiated transaction to combine the two companies. The company expects to commence the offer on or about July 12 by way of publication of an advertisement and filing of a formal take-over bid circular. The offer will be open for acceptance for a period of 35 days and will expire on or about August 16  unless extended or withdrawn. Full details of the offer will be included in the formal offer and take-over bid circular to be publicly filed and subsequently mailed to Calvalley's shareholders.