CALGARY, Aug. 26, 2016 /CNW/ – Altura Energy Inc. (“Altura” or the “Corporation”) (TSX Venture: ATU) is pleased to announce it has entered into an agreement to purchase high quality oil assets (the “Assets” or “Acquisition”) strategically located in east central Alberta for cash consideration of $4.0 million, subject to customary closing adjustments. The Assets add 125 boe/d of low decline production and include facility infrastructure and a natural gas pipeline for future growth. The Acquisition is effective August 1, 2016 and is expected to close by September 21, 2016.
The Acquisition is consistent with Altura’s return on capital strategy focused on acquiring under developed assets targeting the shallow, low cost, multi-zone, medium oil weighted section of the Upper Mannville. The Assets include 125 boe/d (55% oil and liquids) of 28° API oil from the Upper Mannville Formation and 7.3 net sections of land concentrated in the Killam area of Alberta, approximately forty miles west of Wainwright, Alberta. The Assets are 100 percent operated and have a low base production decline estimated at 10 percent per year from a high quality sandstone reservoir. Management has identified 12 Upper Mannville horizontal drilling locations based on current approved well spacing. In addition to the drilling inventory there is potential to improve oil recovery by expanding the pilot waterflood throughout other prospective areas in the field.
The Acquisition has a Licensee Management Rating (“LMR”) of 1.58. Upon closing the Acquisition, the Corporation will have an LMR of 3.85.
ACQUISITION SUMMARY
Purchase price |
$4.0 million |
Current production |
125 boe/d |
Base production decline |
10% per year |
Proved developed producing reserves(1) |
415 mboe |
Proved developed producing BT NPV10(1)(2) |
$4.0 million |
Proved developed producing RLI(3) |
9.1 years |
Current operating netback(4) |
$17.30 per boe |
Note: |
|
(1) |
Gross reserves are the Assets’ total working interest reserves before the deduction of any royalties and including any royalty interests receivable on the Assets. Gross reserve estimates are based on Altura’s internal evaluation and were prepared by a member of Altura’s management who is a qualified reserves evaluator in accordance with National Instrument 51-101 effective August 1, 2016. |
(2) |
Before tax net present value based on a 10 percent discount rate and McDaniel & Associates Consultants’ July 1, 2016 forecast prices. Estimated values of future net revenues do not represent the fair market value of the reserves. |
(3) |
Based on current production of 125 boe/d. |
(4) |
Based on Altura’s forecast WTI of US$50.00/bbl, an exchange rate of 0.77 CAD/USD and $2.50/mcf for natural gas. Operating netback is a non-GAAP measure. Refer to the Non-GAAP measures section of this press release. |
ACQUISITION METRICS
$/flowing boe |
$32,000 per boe/d |
Run rate funds from operations multiple(1) |
5.1 times |
$/Proved developed producing reserves(2) |
$9.64 per boe |
Proved developed producing recycle ratio(3) |
1.8 times |
Note: |
|
(1) |
Calculated as $4.0 million/(125 boe/d x $17.30/boe x 365 days). |
(2) |
Gross reserves are the Assets’ total working interest reserves before the deduction of any royalties and including any royalty interests receivable on the Assets. Gross reserve estimates are based on Altura’s internal evaluation and were prepared by a member of Altura’s management who is a qualified reserves evaluator in accordance with National Instrument 51-101 effective August 1, 2016. |
(3) |
Calculated as $17.30/boe / $9.64/boe. |
Following the completion of the Acquisition, the Corporation will have a working capital surplus of approximately $13.5 million and no debt. Altura’s strategy remains unchanged with the key objectives to:
- Profitably grow corporate production and evaluate recently acquired lands by drilling select horizontal wells from its drilling inventory;
- Establish the Corporation in organic play concepts by acquiring strategic parcels of land during a period when land prices are at a 20-year low; and
- Capitalize on strategic acquisition opportunities.
ABOUT ALTURA ENERGY INC.
Altura Energy Inc. is a public oil and gas corporation active in the exploration and development of oil and natural gas in east central Alberta.