The two Calgary-based companies said the agreement represents a 30 per cent premium over E4‘s closing price of 69 cents per share on the TSX Venture Exchange Tuesday.

“The transaction will provide Twin Butte and E4 shareholders, ownership in a larger, financially stronger company that intends to focus on the exploitation of the combined companies‘ large prospect inventory,‘‘ the companies said in a joint statement late Tuesday.

The deal is valued at about $55.6 million, including the assumption of about $17.2 million of net debt.

As part of the agreement,Twin Butte will issue approximately 15.66 million common shares to the shareholders of E4 based on an exchange ratio of 0.3673 of a Twin Butte common share for each share of E4 _ or 90 cents per share based on a 10 day weighted average price of $2.45 for Twin Butte.

Twin Butte shares closed at $2.50, up three cents on the Toronto Stock Exchange Tuesday.

Twin Butte said from E4 it is buying 1,075 barrels of oil equivalent per day and 3.1 million barrels of oil equivalent of proven plus probable reserves, by its own estimates.

As well, the deal gives it approximately 86,000 net undeveloped acres of land, and a new core area in Ft. St. John, B.C.

“The B.C. assets contribute over 50 per cent of E4‘s current production which will be unaffected by recent royalty changes proposed in Alberta,‘‘ Twin Butte said.

The companies said all of the directors and senior officers of E4, representing approximately 14 per cent of the company, have entered into lock-up agreements to vote their shares in favour of the deal.

The deal includes a $2 million break fee payable by either E4 or Twin Butte.

E4 shareholders are expected to vote on the deal at a meeting to be held sometime in February, 2008.

PIN/Oilweek.Com