Storm Resources Enters into Agreement to be Acquired by Canadian Natural Resources Limited

Source: 11/9/2021, Location: North America

Storm Resources Ltd. has entered into a definitive arrangement agreement (the “Arrangement Agreement“) with Canadian Natural Resources Limited pursuant to which the Purchaser has agreed to acquire all of the issued and outstanding common shares of Storm (“Storm Shares“) for cash consideration of $6.28 per Storm Share (the “Purchase Price“). The proposed transaction (the “Transaction“) is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) and is expected to close in December 2021.

• Attractive Value for Storm Shareholders. The Purchase Price implies an enterprise value for Storm of approximately $960 million including transaction related expenses and decommissioning obligations. The resulting transaction metric is estimated to be 7.5 times annualized funds flow in the first six months of 2021 or 6.1 times excluding loss on risk management contracts (hedging losses).
• All Cash Premium to Market Trading Prices. The Purchase Price represents an all-time high share price for Storm as well as a premium of 10% to Storm’s 10 day volume weighted average trading price on the Toronto Stock Exchange (the “TSX“) as of the close of markets on November 9, 2021.

Under the Transaction, the Purchaser will acquire all of the issued and outstanding Storm Shares in exchange for the payment to shareholders of the Purchase Price for each Storm Share held.

Storm will seek approval of the Transaction by its shareholders and holders of options (together, the “Securityholders“) at a special meeting expected to be held in December 2021 (the “Meeting“). The Transaction is subject to approval by Securityholders at the Meeting, including the approval of at least: (a) two-thirds of the votes cast by the shareholders in person or represented by proxy at the Meeting; (b) two-thirds of the votes cast by the Securityholders in person or represented by proxy at the Meeting, voting together as a single class; and (c) if required, a majority of the votes cast by shareholders in person or represented by proxy at the Meeting, after excluding the votes cast by those shareholders whose votes are required to be excluded in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

The Transaction is subject to various closing conditions, including receipt of court approval, the required Storm Securityholder approval at the Meeting and certain regulatory approvals, including clearance under the Competition Act (Canada). Upon closing of the Transaction, the Storm Shares will be de-listed from the TSX.

The Arrangement Agreement contains customary representations and warranties of each party and interim operational covenants by Storm. The Arrangement Agreement also provides for, among other things, customary support and non-solicitation covenants by Storm, subject to a “fiduciary out” for unsolicited “superior proposals” in favour of Storm and a provision for the right to match any superior proposals in favour of the Purchaser.

The Arrangement Agreement provides for a non-completion fee of $43.5 million, payable in the event that the Transaction is not completed or is terminated in certain circumstances, including if Storm enters into an agreement with respect to a superior proposal or if the Board withdraws or modifies its recommendation with respect to the Transaction.

Contemporaneous with the execution of the Arrangement Agreement, all of the directors and executive officers of Storm have entered into support agreements, agreeing to support the Transaction and vote an aggregate of approximately 12.6% of the outstanding Storm Shares in favour of the Transaction, subject to the provisions of such support agreements.

Further details with respect to the Transaction will be included in the information circular to be mailed to the Securityholders in connection with the Meeting. A copy of the Arrangement Agreement and the information circular will be filed on Storm’s SEDAR profile and will be available for viewing at

Based on the Fairness Opinion (as defined below) and through discussions with its financial and legal advisors, among other considerations, the Board has unanimously: (i) determined that the Arrangement is fair, from a financial point of view, to Storm shareholders; (ii) resolved to recommend that the Securityholders vote in favour of the Transaction; and (iii) determined that the Arrangement and the entering into of the Arrangement Agreement are in the best interests of Storm shareholders.

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