EXHIBIT 99.96
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MATERIAL CHANGE REPORT
1. NAME AND ADDRESS OF REPORTING ISSUER:
Advantage Energy Income Fund
3100, 150 - 6th Avenue S.W.
Calgary, Alberta
T2P 3H7
2. DATE OF MATERIAL CHANGE:
August 24, 2004
3. NEWS RELEASE:
A press release announcing the material change was issued on August 24,
2004 for Canadian wide distribution through Canada Newswire.
4. SUMMARY OF MATERIAL CHANGE:
Advantage Energy Income Fund ("Advantage") entered into an acquisition
agreement through its wholly owned subsidiary Advantage Oil & Gas Ltd.
pursuant to which, subject to certain conditions and adjustments,
Advantage will purchase oil and natural gas properties (the
"Properties") for $186 million, subject to adjustment (the
"Acquisition").
In conjunction with the Acquisition, Advantage entered into an
agreement with a syndicate of underwriters lead by Scotia Capital Inc.
for the purchase by the underwriters on a bought deal basis of
3,500,000 subscription receipts for total gross proceeds of $65.8
million, $75 million principal amount of five-year and $50 million of
seven-year extendable convertible unsecured subordinated debentures.
Subject to the successful closing of the Acquisition on or before
September 30, 2004 Advantage will increase the cash distribution for
the month of October, 2004 by 8.7% to $0.25 per trust unit.
5. FULL DESCRIPTION OF MATERIAL CHANGE:
THE ACQUISITION
The Acquisition is expected to close on or before September 30, 2004
and is effective July 1, 2004. The Properties are being acquired
through a public divestiture process conducted by Kobayashi Partners
Limited of Calgary, Alberta on behalf of the vendor, are located in
Central and Southern Alberta and Southeast Saskatchewan and are
currently producing approximately 6,250 boe/d.
Production is weighted 49% light oil and NGLs, 40% natural gas and 11%
heavy oil (23(degree) API) and approximately 60% of the production is
operated with nine properties representing 87% of current production.
Approximately 13.9 million boe of proven and probable reserves are
being acquired based on an independent engineering determination
prepared by Sproule Associates Limited effective January 1, 2004 in
accordance with National Instrument 51-101. In addition to the
reserves, Advantage will acquire approximately 80,000 net acres of
undeveloped land supported by a combination of 3D and 2D seismic data;
the Acquisition has an attractive valuation of $28,800 per daily boe of
production (net of land and seismic valuation).
BOUGHT DEAL FINANCING
In conjunction with the Acquisition, Advantage entered into an
agreement on August 24, 2004 with a syndicate of underwriters led by
Scotia Capital Inc. for the purchase by the underwriters on a bought
deal basis of (i) 3,500,000 subscription receipts (the "Subscription
Receipts") at a price of $18.80 per Subscription Receipt for total
gross proceeds of $65.8 million, (ii) $75 million principal amount of
five-year 7.50% extendible convertible unsecured subordinated
debentures (the "Five-Year Convertible Debentures") and (iii) $50
million principal amount of seven-year 7.75% extendible convertible
unsecured subordinated debentures (the "Seven-Year Convertible
Debentures"). Closing of the offering is expected to occur on or about
September 14, 2004.
Each Subscription Receipt represents the right to receive one trust
unit on the closing of the acquisition. The proceeds from the offering
of Subscription Receipts will be deposited in escrow pending closing of
the Acquisition. If the Acquisition closes on or before November 1,
2004, the net proceeds will be released to Advantage and used to pay
part of the purchase price of the Acquisition; if the offering closes
before the Acquisition closes, holders of Subscription Receipts at the
time of the Acquisition will be entitled to receive a payment
equivalent to the amount of any cash distributions to Unitholders for
which record dates occur between the closing of the offering and the
closing of the Acquisition, provided they hold Subscription Receipts
upon exchange. If the Acquisition fails to close by November 1, 2004,
or the Acquisition is terminated at an earlier time, the escrow agent
will return the Subscription Receipt issue proceeds and the pro rata
entitlement to interest thereon to holders of the Subscription
Receipts.
The Five-Year Convertible Debentures and the Seven-Year Convertible
Debentures will have a face value of $1,000 per debenture and an
initial maturity date of November 1, 2004. If the Acquisition does not
close on or before November 1, 2004, or if the acquisition is
terminated at an earlier time, both the Five-Year Convertible
Debentures and the Seven-Year Convertible Debentures will mature on the
initial maturity date. If the acquisition is completed on or prior to
November 1, 2004, the Five-Year Convertible Debentures and the
Seven-Year Convertible Debentures will have final maturity dates of
October 1, 2009 and December 1, 2011, respectively.
The Five-Year Convertible Debentures will pay a coupon of 7.50% per
annum, payable semi-annually on April 1st and October 1st of each year,
commencing April 1, 2005, and will be convertible into trust units of
Advantage at a conversion price of $20.25 per trust unit. The
Seven-Year Convertible Debentures will pay a coupon of 7.75% per annum,
payable semi-annually on June 1st and December 1st of each year,
commencing June 1, 2005, and will be convertible into trust units of
Advantage at a conversion price of $21.00 per trust unit. Holders
converting their convertible debentures will receive accrued and unpaid
interest thereon.
The securities being offered will be eligible for RRSPs, RRIFs, RESPs,
and DPSPs, as domestic content. The securities are only being offered
in Canada and are not being offered for sale in the United States.
DISTRIBUTION INCREASE
Subject to the successful closing of the Acquisition on or before
September 30, 2004, Advantage will increase the cash distribution for
the month of October, 2004 by 8.7% to $0.25 per trust unit. The
distribution will be payable on November 15, 2004 to unitholders of
record at the close of business on October 29, 2004. The
ex-distribution date will be October 27, 2004.
6. RELIANCE ON SUBSECTION 7.1(2) OR (3) OF NATIONAL INSTRUMENT 51-102.
Not applicable.
7. OMITTED INFORMATION:
No information has been omitted.
8. EXECUTIVE OFFICER:
The name and business numbers of the executive officer of Advantage Oil
& Gas Ltd., who is knowledgeable of the material change and this report
is:
Peter Hanrahan, Vice-President, Finance and Chief Financial Officer
Telephone: (403) 781-8137
Facsimile: (403) 262-0723
Dated this 3rd day of September, 2004 at the city of Calgary, in the province of
Alberta.
ADVANTAGE ENERGY INCOME FUND,
by Advantage Oil & Gas Ltd.
Per: "PETER HANRAHAN"
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Peter Hanrahan
Vice President, Finance and Chief Financial Officer
Advantage Oil & Gas Ltd.
cc: Toronto Stock Exchange