West Lake Energy Corp. (“West Lake” or the “Company”) has engaged Sayer Energy Advisors to assist with the sale of its non-core producing heavy oil properties located in the Silverdale, Furness, Tangleflags, Lashburn, Mervin, Pikes Peak, Epping, Celtic, Primate and Freemont areas of Saskatchewan as well as non-producing properties located in the Maidstone, Ear Lake, Manitou, Macklin, Marsden and Rush Lake areas of Saskatchewan (the “Properties”).
West Lake operates all of the Properties, generally holding a 100% working interests including associated facilities.
The Properties are generally located near Lloydminster, Saskatchewan and have minimal impending expiries. The Company has ownership in significant seismic data coverage relating to the Properties.
Total production net to West Lake from the Properties averaged approximately 1,179 boe/d in the second quarter of 2018, consisting of 1,179 barrels of heavy oil per day and 16 Mcf/d of natural gas. Sales from the property consist of 99% oil.
Net operating income from the Properties has averaged approximately $3.5 million for the 12 months ended June 30, 2018 and is forecasted to be approximately $5.4 million on an annualized basis, based on second quarter 2018 net operating income.
As of July 28, 2018, the Properties had a positive deemed net asset value of $7.1 million (deemed assets of $42.5 million less liabilities of $35.3 million), with an LMR ratio of 1.20.
West Lake has mapped significant upside on the Properties which resulted in a total of 21 proved plus probable horizontal and vertical drilling locations booked on the Properties and an additional 178 unbooked drilling locations, as well as 120 recompletion opportunities (93 unbooked) and a total of 69 reactivation candidates (65 unbooked).
McDaniel & Associates Consultants Ltd. (“McDaniel”) prepared an independent reserves evaluation of West Lake’s properties as part of the Company’s year-end reporting. The Company extracted a portion of the McDaniel report specifically for this divestiture (the “Reserve Report”). The Reserve Report is effective December 31, 2017 using McDaniel’s January 1, 2018 forecast pricing.
The Company estimates that, as of December 31, 2017, the Properties contained remaining proved plus probable reserves of approximately 3.2 million barrels of oil, with an estimated net present value of $23.3 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 Tuesday, October 16, 2018. Preference will be given to offers to acquire the Properties as one complete package; however, offers will be considered for individual Properties.
For further information please feel free to contact: Ben Rye, Ryan Ferguson Young, Mark Zalucky, Grazina Palmer, Tom Pavic 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