Equal Energy Concludes Strategic Review Process: Announces New Dividend And Sale Of Royalty Assets

CALGARY, Alberta, Nov. 27, 2012 /PRNewswire/ - Equal Energy Ltd. (TSX: EQU) (NYSE: EQU) announced several important initiatives today stemming from its recently-concluded strategic review process.

Highlights include:

• An agreement to sell Equal's remaining royalties and fee title lands in Western Canada to Keystone Royalty Corp. for $11.4 million in cash.
• Initiation of a USD$0.20 per share annual dividend, starting on January 1, 2013.
• A review of the composition of the board of directors and senior management team.
• A review of compensation policies.
• A major reduction in debt as a result of recent asset sales.
• A focus on the liquids rich, natural gas Hunton property in Central Oklahoma.
• Consideration of significant future acquisitions.

Equal also released details of its 2013 operating and capital budget, including a modest, year-over-year increase in liquids rich, natural gas production from the Central Oklahoma assets, an estimated cash flow of $33 million, and a $36 million capital budget.

"Our shareholders and other stakeholders have spoken, and we have listened", Don Klapko, Equal's President said. "The strategic review and the plan we are announcing today greatly strengthen our company. We believe the new dividend is well within our financial resources. Our balance sheet is strong with approximately $150 million of cash and borrowing capacity combined."

Mr. Klapko added: "We are now in a position to consider significant accretive acquisitions providing additional growth opportunities. Furthermore, continued recovery in natural gas and natural gas liquids pricing provides significant additional upside."

Sale of Royalty Assets:

Under an agreement with Keystone Royalty Corp., Equal will sell its royalties and fee title lands in Western Canada for $11.4 million in cash. Equal has also agreed to assign residual resource income tax pools to Keystone under the provisions of the Canadian Income Tax Act for $0.75 million in cash. The effective date of the agreement is October 1, 2012 and closing is scheduled for December 13, 2012. The date of the assignment of the income tax pools has not been determined.

Equal will add the proceeds from the sale of the royalties and fee title lands to cash reserves, resulting in an estimated $22 million in cash at year-end 2012. Net debt at year-end 2012 will total approximately $23 million, including outstanding convertible debentures. Equal's credit facility has been adjusted to $125 million secured against the borrowing base of its Central Oklahoma assets. The royalties and fee title lands were Equal's last remaining Canadian assets and the company is currently winding down its Canadian operations.

Conclusion of Strategic Review:

The strategic review process that began on May 3, 2012 is now complete. Dan Botterill, Equal's chairman, said: "We are pleased to have brought the review to a successful conclusion. We are confident that the measures now being put in place herald an even brighter future for Equal."

Mr. Botterill added that, as part of the process, the board will review its own make-up, the composition of the executive management team, and the company's compensation policies.

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