MNP Ltd. (the “Trustee”) has been appointed as the Trustee of the bankrupt estate of Direct Oil & Gas Inc. (“Direct” or the “Company”). The Trustee has engaged Sayer Energy Advisors to assist the Trustee with the sale of all of Direct’s oil and natural gas properties.
The Company’s assets are concentrated in the northern part of the Peace River Arch in Alberta. The assets include interests in the Cecil, Dixonville, Eureka, Habay, Charlie, Beaton, Worsley, Notikewin, Hotchkiss, Lovet, Vista, Cranberry, and Chinchaga/Hamburg areas (the “Properties”).
Recent production net to the Company has averaged approximately 477 boe/d (130 barrels of oil per day and 2.1 MMcf/d of natural gas). Direct operates most of its production, which is mainly long-life with low decline.
Effective March 16, 2020, all production from the Properties was shut-in.
The Company’s operating income in November 2019 was approximately $215,000, or $2.6 million on an annualized basis.
Direct’s LMR as of February 1, 2020 was 1.15, with deemed assets of $19.8 million and deemed liabilities of $17.2 million.
The Company prepared an internal reserves evaluation of the Properties as part of the Company’s year-end reporting (the “Internal Report”), using management’s best efforts, in accordance with the Canadian Oil and Gas Handbook and National Instrument 51-101 guidelines. The Internal Report was effective January 1, 2019 using GLJ Petroleum Consultants Ltd. January 1, 2019 forecast pricing.
Subsequent to preparation of the Internal Report the Company sold a portion of its interests in the Worsley area of Alberta and the following reserves totals have been adjusted accordingly.
The Company estimated that, as of January 1, 2019, the Properties contained remaining proved plus probable reserves of 2.3 million barrels of oil and natural gas liquids and 34.8 Bcf of natural gas (8.1 million boe), with an estimated net present value of $71.9 million using forecast pricing at a 10% discount. The value of the Company’s proved developed producing reserves was estimated to be approximately $23.4 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).
Offers relating to this process will be accepted until 12:00 pm on Thursday, April 23, 2020.
For further information please feel free to contact: Ben Rye, Grazina Palmer or Tom Pavic at 403.266.6133.