Gray Dusenbery Oil and Gas LP (“GDOG” or the “Company”) has engaged Sayer Energy Advisors to assist with a strategic review of its business and assets. GDOG’s main producing properties are located in the Strachan-Ferrier, Ricinus, Rosevear and Cooking Lake areas of Alberta (the “Properties”). Alternatives may include but are not limited to the sale or farm-out of the Properties or a sale of the shares of the Company.
The Company is a private, limited partnership founded in 2009 which presents an attractive acquisition opportunity with low-decline, liquids-rich natural gas production and a large, drill-ready low-risk Cardium light oil play.
GDOG is owned and controlled by its founders. The General Partner, Hell’s Half-Acre Petroleum Corporation (“HHA”) is the licensed operator and manages the assets for the limited partnership.
HHA operates all of the Properties, generally holding a 100% working interest in producing wells and associated facilities. The Properties are primarily located in central Alberta and the lands have minimal impending expiries. The Company also has license to or ownership of significant seismic 3D data coverage relating to the Properties.
Total production net to GDOG from the Properties currently averages 643 boe/d, consisting of 3.16 MMcf/d of natural gas and 116 barrels of oil and natural gas liquids per day.
As of October 6, 2018, the Properties had a positive deemed net asset value of $8.0 million (deemed assets of $12.1 million less liabilities of $4.1 million), with an LMR ratio of 2.96.
The Company has positive working capital, approximately $2.0 million in income tax pools, a $4.0 million credit facility with $1.2 million drawn, no severance obligations and minimal term remaining on its office lease.
GDOG has assembled a significant undeveloped land position on the Ferrier Cardium light oil play. GDOG has 7,520 acres gross (5,060 acres net) Cardium rights with an average working interest of 67%. The lands are contiguous in two blocks and are largely undeveloped. GDOG has identified up to 33 (29.2 net) one-mile Cardium horizontal locations on its lands. Actual development plans include a combination of 1, 1.5, and 2-mile locations. GLJ Petroleum Consultants Ltd. (“GLJ”) recognized five 1-mile, four 1.5-mile, and three 2-mile Cardium locations as proved reserves with a PV 10% value of $19.4 million within the Company’s year-end evaluation. Several wells have been drilled offsetting GDOG lands, and drilling remains active in the area.
GLJ prepared an independent reserves evaluation of GDOG’s properties as part of the Company’s year-end reporting (the “GLJ Report”). The GLJ Report is effective December 31, 2017 using an average of three Consultant’s (GLJ, McDaniel & Associates Consultants Ltd., Sproule Associates Limited) forecast pricing at January 1, 2018.
GLJ estimates that, as of December 31, 2017, the Properties contained remaining proved plus probable reserves of 46.7 Bcf of natural gas and 3.9 million barrels of oil and natural gas liquids (11.7 million boe), with an estimated net present value of $77.0 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).
Proposals relating to this process will be accepted until 12:00 pm on Thursday, November 29, 2018.
For further information please feel free to contact: Tom Pavic, Ben Rye, Mark Zalucky, Grazina Palmer, 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