CALGARY, AB, Oct. 19, 2023 /CNW/ – Tamarack Valley Energy Ltd. (“Tamarack” or the “Company“) is pleased to announce it has entered into a definitive agreement (the “Agreement“) with a private operator to sell its non-core west central Alberta assets (the “Assets“) for $123.0 million in cash (the “Transaction“).
With successful consolidation and growth of Tamarack’s core holdings in the Clearwater and Charlie Lake plays, the Company continues to streamline its portfolio of holdings, high grade future development inventory and drive enhanced operational efficiencies. The Transaction accelerates debt reduction, further strengthening Tamarack’s balance sheet and enabling the Company to focus on program execution within its highly economic oil weighted plays.
- Delivering Record Production – Tamarack delivered record corporate production of ~70,000 boe/d(1) for the month of September, including production from the Assets being sold. This demonstrates the successful execution of Tamarack’s development program year to date in 2023.
- Focus on Debt Reduction – Sale proceeds, in conjunction with forecasted free funds flow(2) at strip prices, have the Company on track to achieve the first net debt(2) threshold of its enhanced return of capital framework in 2023, as fourth quarter net debt(2) is expected to fall below $1.1 billion.
- Improving Operating Field Netbacks – The Company expects corporate operating field netback(2) to improve by approximately 3% to 5% owing to higher pro forma liquids weighting and lower operating costs on a per unit basis.
- High Grading Production – Upon closing of the Transaction, the Charlie Lake and Clearwater assets will represent ~88% of total 2023 exit production, culminating a successful repositioning of the asset base through strategic M&A transactions and organic development over the past three years.
- Significant Future Resources to Develop – Tamarack’s material positions across the Charlie Lake and Clearwater plays afford growth of higher netback production to offset divested production volumes within the five-year plan.
- 2023 Capital and Production Outlook – Tamarack will provide an update concurrent with our third quarter results.
Tamarack is selling the Assets for cash consideration of $123.0 million, plus the assumption of $38.4 million and $80.6 million gross operated inactive and active ARO(3) respectively. Production from the Assets is largely focused on the Cardium and Leduc formations with a natural gas weighting of ~60%. Proceeds from the Transaction represent an estimated next twelve months operating netback(2) multiple of 2.5x, at current strip pricing.
The Assets being sold are currently undercapitalized within the Company’s portfolio, as Tamarack’s development remains focused on core Charlie Lake and Clearwater prospects within the long-term development plan. Proceeds from the Transaction bring forward over four years of future excess funds flow(2) that the Assets would have generated within Tamarack’s plan for redeployment to the Charlie Lake and Clearwater plays.
Current production from the Assets is approximately 7,000 boe/d(4). Tamarack’s fourth quarter and full year 2023 average production is expected to be reduced by approximately 4,500 boe/d(5) and 1,200 boe/d(6) respectively as a result of the Transaction. Looking ahead, the sale of the Assets will reduce Tamarack’s 2024 production outlook by approximately 6,000 boe/d(7). Closing of the Transaction is expected to occur on or about November 3, 2023, subject to customary closing considerations.