Sayer Energy Advisors (“Sayer”) has been engaged to assist Wolf Coulee Resources Inc. (“Wolf Coulee” or the “Company”) with the sale of the shares of the Company or any of its assets.
The Company’s Board of Directors has determined that concluding a transaction or series of transactions is imperative. Although the sale of the shares is preferred, the Company will entertain offers on any of its assets. The Company has long life reserves (1P RLI >25 years), less than 50 shareholders and no bank debt but lacks the critical mass required to retain its health in the current environment
The offering presents an opportunity to acquire a focused company with operated, high working interest, long life, concentrated assets located in the Retlaw Focus Area. The Company’s assets would be beneficial to a larger entity that has a long-term view on natural gas.
Wolf Coulee’s field production in December averaged 640 boe/d (3.05 MMcf/d of natural gas, 89 bbl/d of oil and 42 bbl/d of ngls). The Company currently has approximately 300 boe/d (95% natural gas) shut-in.
In spite of shutting in most of its natural gas wells for approximately half of 2018, the Company’s LMR is 1.0 (rising with re-instatement of production) with net operating income (“NOI”) for the year of nearly $1 million. The Company’s NOI for December 2018 is estimated to be $70,000, a significant drop from October. The drop in NOI is a result of the collapse in oil pricing and self-imposed shipping curtailments in November and December. December’s average oil price is estimated to be $40/boe due to expanded differentials. December’s average natural gas price, with the absence of much cooler weather, is $2.33/Mcf. January’s NOI is estimated to be approximately $170,000.
Wolf Coulee has mapped, partially developed and produces oil, natural gas and natural gas liquids from a series of lithic channels in the Upper Mannville throughout the Retlaw/Badger/Hector areas. These channels contain very large hydrocarbons ‘in-place’ and provide a significant number of proven low-risk development drilling locations. Most of these are horizontal development locations de-risked by offset production and seismic. These PUD locations will significantly increase current low recovery factors as well as the Company’s oil and natural gas production. Initial development utilized vertical wells followed by several horizontal multi-stage frac’d development wells.
InSite Petroleum Consultants Ltd prepared an independent reserves evaluation of Wolf Coulee’s properties (the “InSite Report”). The InSite Report is effective July 1, 2017 using InSite’s June 30, 2017 forecast pricing.
InSite estimates that, as of July 1, 2017, Wolf Coulee’s properties contained remaining proved plus probable reserves of 1.7 million barrels of oil and natural gas liquids and 43.2 Bcf of natural gas (8.9 million boe), with an estimated net present value of $40.6 million using forecast pricing at a 10% discount. Between July 1, 2017, and Jan 1, 2019, the Company produced 60,000 barrels of oil, 1.3 Bcf of natural gas and 14,000 barrels of natural gas liquids (287,000 boe in total).
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 divestiture will be accepted until 12:00 pm on Thursday, February 21, 2019.
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