Battle River Energy Ltd. (“Battle River” or the “Company”) has engaged Sayer Energy Advisors to assist the Company with the sale of certain non-core natural gas interests located in the Provost area of Alberta, specifically the Sullivan Lake, Provost Viking Sand Gas Unit, Battle River Gas, North Provost Gas Unit and Kessler areas (the “Properties”). Battle River is selling the Properties in order to focus its operations on its core assets.
Current daily production net to Battle River from the Properties is approximately 7.8 MMcf/d of natural gas and 245 barrels of oil and natural gas liquids per day (1,543 boe/d).
Battle River’s forecast of net operating income from the Properties is approximately $4.6 million, or $380,000/month.
Due to the high heat content of the sales gas, Battle River receives a 10% premium to AECO pricing. In March 2021, Battle River received a sales price of $50.00/bbl for its natural gas liquids. The Provost Viking Sand Gas Unit produces 38 barrels of liquids per MMcf of natural gas production and the North Provost Viking Gas Unit produces 53 barrels of liquids per MMcf of natural gas production.
At Sullivan Lake, the Company receives third party processing revenue of approximately $40,000 per month. This is up from approximately $15,000 per month in 2019. Additionally, third parties have indicated plans for future drilling which could increase future third-party processing revenue. Furthermore, there is approximately 1.5 MMcf/d of stranded third-party natural gas that could be tied-in for additional processing revenue of approximately $500,000 per year.
Battle River has also identified power generation sites at Sullivan Lake (~530 Mcf/d or 2 MW), Kessler (~900 Mcf/d or 3.6MW), North Provost Gas Unit (~1,100 Mcf/d or 4.4 MW) and numerous other in field opportunities ranging from 30-300 Mcf/d (120 kW to 1,200 kW).
The Properties have very reasonable processing fees with third parties and utilize an extensive pipeline network for future tie-ins and transportation. In the Provost area numerous companies have been drilling in the Mannville and Viking formations.
InSite Petroleum Consultants Ltd. (“InSite”) prepared an independent reserves evaluation of the Properties as part of the Company’s year-end evaluation (the “InSite Report”). The InSite Report is effective December 31, 2019 using Sproule Associated Limited’s December 31, 2019 forecast pricing. InSite estimates that, as of December 31, 2019, the Properties contained remaining proved plus probable reserves of 35.6 Bcf of natural gas and 1.2 million barrels of oil and natural gas liquids (7.1 million boe), with an estimated net present value of $14.1 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 divestiture will be accepted until 12:00 pm on Wednesday June 30, 2021.
For further information please feel free to contact: Ben Rye, Grazina Palmer, or Tom Pavic at 403.266.6133.