Sayer Energy Advisors has been engaged to assist Firenze Energy Ltd. (“Firenze” or the “Company”), a subsidiary of Toscana Energy Income Corporation (“Toscana”) with the sale of its light, sweet oil property in the Nevis area, its light & medium oil property in the Willesden Green area and its sweet natural gas property in the Tony Creek area of Alberta (the “Properties”). Firenze is selling the Properties as part of Toscana’s strategic alternatives process.
Recent total oil and natural gas sales net to Firenze from the Properties have averaged approximately 272 boe/d (73 barrels of oil and natural gas liquids per day and 1.2 MMcf/d of natural gas). January’s net operating income from the Properties totalled approximately $132,000 ($1.6 million annualized).
The LLR from the Properties as of March 3, 2018 is 2.74, with a net deemed asset value of $4.5 million (net deemed assets of $7.1 million and net deemed liabilities of $2.6 million).
Firenze’s net sales from the Company’s seven oil wells and one natural gas well at Nevis have recently averaged approximately 74 boe/d (34 barrels of oil per day, 12 barrels of natural gas liquids per day and 166 Mcf/d of natural gas). There is potential to drill two infill horizontal Wabamun oil wells and two vertical Glauconitic oil wells on Firenze’s land at Nevis.
Firenze holds working interests of 50% and 100% in six producing Cardium oil wells (three wells at 100%, two wells at 50%, one well at 50% APEN) in the Willesden Green area. Firenze’s recent net sales from the Willesden Green property have averaged approximately 10 barrels of oil and natural gas liquids per day and 97 Mcf/d of natural gas (26 boe/d). There is potential to drill two additional Cardium horizontal wells on Firenze’s land at Willesden Green. Recent horizontal wells in the Cardium drilled by third parties offsetting the Company’s land have had IP’s of up to 250 barrels of oil per day. Additional upside exists through refracking some of the existing producers, as they were completed using outdated technology. Significant production increases and ultimate increases in recoverable reserves are forecasted with modern frac technology.
Firenze holds a 100% working interest in four sections of land at Tony Creek, on which there are 11 natural gas wells which produce from the Dunvegan, Notikewin, Falher and Cadomin formations. The Company’s recent net sales from the Tony Creek property have averaged approximately 172 boe/d (928 Mcf/d of natural gas and 17 barrels per day of natural gas liquids) which produce into a 100% Firenze-owned natural gas plant.
Sproule Associates Limited (“Sproule”) prepared an independent reserves evaluation of Firenze’s properties as part of the Company’s year-end reporting (the “Sproule Report”). The Sproule Report is effective December 31, 2017 using Sproule’s January 1, 2018 forecast pricing. Sproule estimates that, as of December 31, 2017, the Properties contained remaining proved plus probable reserves of 603,000 barrels of oil and natural gas liquids and 7.7 Bcf of natural gas (1.9 million boe), with an estimated net present value of $15.7 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 to acquire the Properties will be accepted until 12:00 pm on Thursday, April 26, 2018.
For further information please feel free to contact Ryan Ferguson Young, Tom Pavic, Ben Rye, Mark Zalucky, Grazina Palmer 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