CALGARY, AB, Aug. 2, 2024 /CNW/ - (TSX:RBY) – Rubellite Energy Inc. ("Rubellite", or the "Company") is pleased to announce that today it has acquired Buffalo Mission Energy Corp. ("Buffalo Mission"), a private Mannville stack-focused heavy oil producer, for a total purchase price of approximately $97.5 million (the "Acquisition"). "The acquisition of Buffalo Mission is a strategic step forward in Rubellite's growth, consolidation and portfolio enhancement strategy" said Sue Riddell Rose, President and CEO of Rubellite. "The acquired assets increase the scale of Rubellite's operations, enhance funds flow, and add material and attractive drilling inventory for Rubellite, which in combination with our existing Clearwater assets, provides the basis for a strong growth profile with increased development inventory, exploration depth and exposure to large oil-in-place assets for future enhanced recovery potential. We are excited about employing our multi-lateral horizontal drilling expertise into this high netback heavy oil play in the Mannville stack and partnering with the Frog Lake First Nation and Frog Lake Energy Resources Corp. ("FLERC") on this development, building upon our established partnerships with Indigenous communities proximal to our field operations. With integration of this acquisition, Rubellite has established substantial positions in both the Clearwater and Mannville stack plays. Our focus is on continued growth by advancing the development of these core assets and evaluating the captured exploration prospects, while in parallel pursuing additional potential consolidation opportunities in these two attractive play trends to further grow shareholder value." TRANSACTION HIGHLIGHTS Provides an attractive land, production and inventory base to ground a growth strategy in the Mannville stack of the Cold Lake Oil Sands Region, complementary to Rubellite's Clearwater assets in northern Alberta; Adds approximately 67.3 gross (36.3 net) sections of contiguous, stacked Mannville rights with a total of 170 gross (85 net(1)) identified drilling locations in the primary producing Waseca formation and 220 gross (110 net(1)) additional potential locations across other zones within the Mannville stack; Adds high-netback conventional heavy oil production of approximately 2,500 bbl/d and growing as new wells recently placed on-stream clean up and progressively attain stable oil production; and Attractive transaction metrics: 2.3 times annualized net operating income with close to $47/bbl operating netback at US$75/bbl WTI; $39,000 per flowing boe acquired; and Maintains balance sheet strength with a pro forma leverage ratio of 1.2 times year end net debt to Q4 2024 annualized adjusted funds flow. Net locations assume participation elections by FLERC at a 50% working interest in all future drilling activity and are internally estimated. See "Estimated Drilling Locations" in this news release. STRATEGIC RATIONALE Directly aligned with Rubellite's growth and portfolio enhancement strategy. The Mannville stack assets provide an opportunity for the Rubellite team to employ its successful Clearwater multi-lateral horizontal drilling expertise in this analogous region; Positions Rubellite as a leading explorer, developer and consolidator in the Clearwater and Mannville stack plays; Increases Rubellite's current high netback conventional heavy oil production base by approximately 56%; Increases adjusted funds flow by approximately 38% on an annualized basis; Value-add inherent through operating, administrative and capital execution synergies across the expanded asset base; Improves positioning to accelerate organic growth, advance exploration activities and reduce debt with enhanced free funds flow; Increased size and scale enhances ability to pursue further value-add consolidation opportunities; and Expands Rubellite's strong relations with Indigenous communities through the new partnership with the Frog Lake First Nation and FLERC. TRANSACTION DETAILS The total consideration paid by Rubellite for the Acquisition was $97.5 million, inclusive of $23.5 million of Buffalo Mission's assumed net debt, which consisted of $62.7 million in cash and the issuance of 5.0 million common shares of Rubellite to certain shareholders of Buffalo Mission having a deemed value of $11.3 million. Rubellite funded the cash portion of the Acquisition through (a) expanded bank credit facilities (the "Expanded Facility"); and (b) a new senior second-lien term loan placed, directly or indirectly, with certain directors and officers of Rubellite and the Company's significant shareholder for $20 million (the "Second-Lien Term Loan"), all on favorable terms to the Company. The Company's borrowing base has been increased to $100 million, an increase from $60 million, until the next scheduled semi-annual borrowing base redetermination on or before November 30, 2024. In addition, the Company's lenders provided a $20 million bank syndicate term loan that matures on or before December 15, 2024. The Second-Lien Term Loan bears interest at 11.5% with interest to be paid quarterly, and matures in five years from the date of issue, and can be repaid by the Company without penalty at any time. The Boards of Directors of both Rubellite and Buffalo Mission unanimously approved the Acquisition. ATB Securities Inc acted as Financial Advisor, BMO Capital Markets acted as Strategic Advisor, and Burnet, Duckworth & Palmer LLP acted as legal advisor on the Acquisition. BMO Capital Markets also acted as Financial Advisor with respect to the Second-Lien Term Loan. Q2 2024 OPERATIONS AND FINANCIAL HIGHLIGHTS Rubellite is scheduled to release its second quarter 2024 financial and operating results on August 8, 2024. Select unaudited  operational and financial highlights for the second quarter of 2024 are provided below: Second quarter conventional heavy oil sales production of 4,503 bbl/d was relatively unchanged from the first quarter of 2024 (Q1 2024 - 4,514 bbl/d); and Adjusted funds flow(1) in the second quarter was $20.7 million ($0.33 per share), a 12% increase from the first quarter of 2024 (Q1 2024 - $18.5 million; $0.30/share). Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures". UPDATED OUTLOOK AND GUIDANCE Rubellite's Board of Directors has approved development capital spending for 2024 of approximately $82 to $87 million to drill, complete, equip and tie-in thirty four to thirty five (34.0 to 35.0 net) multi-lateral development / step-out wells in the greater Figure Lake area as previously disclosed, twelve gross (6.0 net) wells on the recently acquired Mannville stack assets, and includes a total of $6.0 million of estimated capital spending required for the Figure Lake gas sales plant and related pipeline tie-ins. Forecast drilling activities will be funded ...