Sayer Energy Advisors has been engaged to assist Logic Energy Ltd. (“Logic” or the “Company”) with a corporate sales process. Logic is a private corporation with 49 shareholders, very low overhead and only two full-time and three part-time employees.
Logic currently produces approximately 336 barrels of oil equivalent per day (230 barrels of oil and natural gas liquids per day and 636 Mcf/d of natural gas) from its 100% working interest light oil and natural gas properties in the Hussar and Halkirk areas of southern Alberta (the “Properties”).
The Company believes that, with additional capital, accessing the significant upside on the Properties (infill drilling, reactivations and waterflood modifications) could increase production to as much as 2,300 boe/d.
The Properties include two 100% owned facilities for custom crude processing, salt water disposal, natural gas compression and NGL extraction. Both Properties are pipeline connected to oil sales through on-lease LACT units. Significant annual custom processing revenue could be increased with minimal capital expenditure.
Logic’s operating income for 2017 is forecasted to be $3.15 million.
The Freehold lands leased by the Company on the Properties enjoy a royalty rate negotiated to well below industry norms, resulting in an average corporate royalty rate of 3.19%. Through a previous agreement with the Freehold mineral owner to pre-pay the royalties, Logic now pays no Freehold royalty on production from most of its leased land at Hussar and it pays no Freehold royalty on its leased land at Halkirk. New wells drilled on certain lands at Hussar will be royalty-free for as long as the leases are held by Logic or its successor.
Sproule Associates Limited prepared an independent reserves evaluation of Logic’s properties as part of the Company’s year-end reporting. The Sproule Report is effective December 31, 2016 using Sproule’s December 31, 2016 forecast pricing.
Sproule estimates that, as of December 31, 2016, Logic’s Properties contained remaining proved plus probable reserves of 2.9 million barrels of oil and natural gas liquids and 3.5 Bcf of natural gas (3.5 million boe), with an estimated net present value of $75.4 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, May 11, 2017.
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