The Court of Queen’s Bench of Alberta granted an order on January 28, 2016, placing High North Resources Ltd. (“High North” or the “Company”) in receivership (the “Receivership”) and naming PricewaterhouseCoopers Inc. (“PwC”) as the receiver (the “Receiver”).
Pursuant to the terms of the Receivership it is the intent of the Receiver to sell the assets of the Company in a sales process as part of the Receivership proceedings. Sayer Energy Advisors has been engaged to assist PwC with the sales process.
The Receiver is offering for sale High North’s working interests in its only oil and natural gas asset, which consists of mainly a 100% working interest in an oil property in the Girouxville area of northwestern Alberta (the “Property”).
Prior to being shut-in by the Company in January 2016, production net to High North from the Property averaged approximately 150 barrels of oil per day. At that time the Property had a deemed net asset value of $10.2 million, with an LMR ratio of 11.44. As of May 7, 2016 the LMR of the Property was 6.05.
With the reinstatement of production and the installation of water disposal facilities, which the Receiver’s consultants estimated can be concluded for a capital expenditure of approximately $35,000, the Property should be capable of producing significant operating cash flow.
In addition, with the installation of water disposal facilities, the Property can be fully developed with additional horizontal oil wells, with potentially up to eight wells per section, 25 in total, consistent with the development in the pool to the east of the Company’s land.
GLJ Petroleum Consultants Limited prepared an independent reserves evaluation of the Girouxville property as part of the Company’s year-end reporting. The GLJ Report is effective March 31, 2015 using GLJ’s January 1, 2015 forecast pricing. GLJ estimates that, as of March 31, 2015, the Girouxville property contained remaining proved plus probable reserves of 1.47 million barrels of oil with an estimated net present value of $25 million using forecast pricing at a 10% discount.
Summary information relating to this divestiture is attached to this correspondence. More specific information is available at www.sayeradvisors.com. A package of more detailed confidential information will be sent to any party executing a Confidentiality Agreement (copy attached).
Cash offers relating to this divestiture will be accepted until 12:00 pm on Thursday, June 30, 2016.
For further information please feel free to contact: Tom Pavic, Ben Rye, Jill Switzer, Ryan Ferguson Young or myself at 403.266.6133.
Alan W. Tambosso, P.Eng. P.Geol.
SAYER ENERGY ADVISORS
1620, 540 – 5th Avenue SW
Calgary, Alberta T2P 0M2
P: 403.266.6133 C: 403.650.8061 F: 403.266.4467