Since the third quarter of 2015, average metrics per play in Western Canada are substantially lower versus historical prices. This has been mainly caused by a ~50% drop in the price of oil. Deal values have also dropped by about 50% since then, when looking at deal value per barrel of oil equivalent per day ($/BOE/D). These are transactions that historically have gone for $100,000-$120,000 and are now being sold for roughly half that amount.
For the most part, transactions where oil production is greater than 50% of a deal’s commodity mix, there seems to be fairly similar metrics on a $/BOE/D basis when comparing the prominent formations. Currently, most of the high-quality plays are fetching between $50,000-$60,000 per BOE/D with a couple of exceptions.
The Williston Basin Bakken (Canada only) tops the list with the average deal value at $61,174/BOE/D, however other plays get fairly similar metrics. The reason the Bakken tops the list is likely due to the higher number of oil producing wells in the region as compared to other plays. Oil plays in the W5/W6 region tend to come with more associated gas, which is still less valuable than oil on a BOE basis.
The Slave Point in Northern Alberta and heavy oil around the Lloydminster area get considerable discounts with deal values averaging $35,000 and $25,000 per BOE/D respectively. This is likely due to higher operating expenses, particularly in the Lloydminster region where water and sand cuts can be particularity high. The Slave Point play seems to be less sought after as it doesn’t offer as attractive netbacks as its counterparts.
What is probably most interesting within this analysis is how oil sands operations are fetching metrics comparable to the highest quality light oil plays in the basin. Average deals in the oil sands have been valued at $53,543/BOE/D. This is likely due to a combination of continual optimization efforts (thereby reducing costs) and the long-term prospects of the commodity.
The above data was gathered from the BOE Report’s M&A Database