CALGARY, AB – WEST LAKE ENERGY CORP. (“West Lake” or the “Corporation“) is pleased to announce the closing of its acquisition of Boulder Energy Ltd. (“Boulder“), a privately held primarily light-oil producer with assets in the Brazeau area of West Central Alberta. The Boulder acquisition provides a new core area for the Corporation that targets the Belly River formation, characterized as low decline, high netback, assets with substantial development upside and low asset retirement obligations (“ARO“). The Belly River is a 350-metre thick, stacked channel system that offers multiple drilling locations/ reservoir targets. The acquisition provides substantial opportunity for future low-cost development and to increase reserve recovery through enhanced oil recovery (“EOR“) programs.
“This acquisition is transformational for West Lake,” said Bruce McDonald, CEO. “The Board and executive are focused on a new strategic direction, and this acquisition represents the first step in our plan to achieve our growth and value goals over the next few years. The Boulder asset is a great fit to our existing portfolio, adding a new core area where we can leverage our technical expertise while contributing significant primary and secondary development growth opportunities. This is a major milestone for the Corporation and positions us for future growth through increased enterprise value, production, reserves, netbacks and cash flow.”
Complementary to West Lake’s existing portfolio, the Boulder acquisition will add material established production and ample opportunity for future growth. Some of the highlights of the acquisition include:
- Large core area with approximately 140,000 net acres of highly concentrated land and well-developed infrastructure;
- Approximately 2,500 boepd of high quality light oil production (44˚ API);
- Low production decline of 17%;
- Proved and probable reserves of 32.8 mmboe (as of December 31, 2020), representing a reserve life index (“RLI“) of 35.9 years;
- Large original-oil-in-place of 777 mmbbls with lower than 3% recovery factor to date;
- Over 160 identified drilling locations with significant water flood and EOR potential; and
- Low ARO with an Alberta Energy Regulator’s Liability Management Rating (“LMR“) of over 4x.
Boulder’s assets are a great fit with West Lake’s technical expertise. Over the next 18 months, the Corporation intends to develop the Belly River assets in an environmentally conscious and sustainable manner through a combination of optimization, multi-lateral drilling and secondary recovery. West Lake expects the assets to generate strong cash flow, which will not only be self-sustaining but can also fund significant growth through development. The acquisition is expected to provide significant value creation to stakeholders.
West Lake is committed to strong environment, safety, and governance practices (“ESG“). As part of this mandate, management is focused on identifying, evaluating, and implementing potential projects and opportunities to reduce its environmental footprint. Current ESG practices include using only recycled water in its fracking operations, decreasing emissions, utilizing voluntary carbon offsets where appropriate and exploring energy transition opportunities. The Boulder acquisition contributes to this goal by reducing the Corporation’s ARO liability relative to its reserve base and increase its sustainability over the long term.
West Lake funded the acquisition with cash on-hand, a new term loan provided by ATB Financial and the sale of certain newly created gross overriding royalty (“GORR“) interests.
ATB Capital Markets Inc. acted as financial advisor to West Lake. Burnet, Duckworth & Palmer LLP acted as West Lake’s legal advisor for the acquisition of Boulder, while McCarthy Tétrault LLP acted as West Lake’s legal advisor for the sale of GORR.
About West Lake Energy Corp.
West Lake Energy Corp. is a privately held Calgary-based oil and natural gas company focused on development and exploration in western Canada. Committed to sustainability, the Corporation is implementing a growth strategy of selective acquisitions and exploration and development of its core areas through a combination of primary, secondary and enhanced oil recovery techniques to increase reserves, production and cash flows at attractive returns on capital. At the same time, West Lake is dedicated to strong environmental, social and governance practices, including potential future energy transition opportunities. Additional information about West Lake can be found on the Corporation’s website at www.westlakeenergy.ca .
Oil And Gas Information Advisory
Barrels of oil equivalent (“boe“) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value. Boe/d means barrels of oil equivalent per day.
American Petroleum Institute
million barrels of oil equivalent
Non-GAAP Financial Measures
In this release, the Corporation references the term “free cash flow”, which is a non-generally accepted account principle financial measure and is not a standardized financial measure under International Financial Reporting Standards. Such term should not be considered as an alternative to, or more meaningful than the terms “net income”, “comprehensive income”, “cash provided by operating activities” or “cash used in investing activities”. Free cash flow is determined by the Corporation as adjusted funds flow less net capital expenditures and is considered a useful measure of West Lake’s ability to invest in its capital program and settle outstanding debt and obligations.