Canadian Spirit Resources Inc. (“Canadian Spirit” or the “Company”) has engaged Sayer Energy Advisors to assist it with a strategic alternatives process. The Company is open to reviewing all alternatives including, but not limited to, a corporate transaction resulting in the direct or indirect sale or disposition of all or substantially all of the shares of the Company or the sale of the majority of Canadian Spirit’s oil and natural gas assets, in whole or in part, or a joint venture covering all or a majority of the assets of Canadian Spirit.
Canadian Spirit is a publicly-traded entity listed on the TSX-V under the ticker symbol SPI, with operated and non-operated working interests located in the Altares, Attachie and Farrell Creek areas of northeastern British Columbia (the “Properties”).
The Company holds various operated and non-operated working interests in approximately 77 sections of land. The Properties are prospective for the Montney and includes Montney rights in approximately 75 sections of land.
Canadian Spirit’s production was shut-in in June 2023 due to low natural gas prices at Station 2. Production was re-activated on November 17, 2023. Prior to shutting in production, Canadian Spirit’s average daily net sales production for the first four months of 2023 was approximately 1.1 MMcf/d of natural gas (179 boe/d). Current production since reactivation is approximately 685 Mcf/d of natural gas (114 boe/d).
As at September 30, 2023, the Company had a nominal working capital deficit of $62,628. As at December 31, 2022, Canadian Spirit had total unused Canadian income tax pools of approximately $107.4 million, including $84.9 million of non-capital losses.
The Company has total royalty credits of approximately $3.5 million.
As of December 6, 2023, Canadian Spirit’s PCA score was calculated to be 35.04.
The Company also holds a 25% working interest in a water pipeline and has a water license with British Columbia Hydro and Power Authority for fresh water supply.
McDaniel & Associates Consultants Ltd. (“McDaniel”) prepared an independent reserves evaluation of Canadian Spirit (the “McDaniel Report”) as part of the Company’s year-end reporting. The McDaniel Report is effective December 31, 2022 using an average of GLJ Ltd., McDaniel and Sproule Associates Limited’s January 1, 2023 forecast pricing (“3C Average”). McDaniel estimated that, as of December 31, 2022, Canadian Spirit had remaining proved plus probable reserves of 1.4 Bcf of natural gas (228,000 boe), with an estimated net present value of $746,000 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).
Proposals relating to this process will be accepted until 12:00 pm on Thursday, February 22, 2024.
For further information please feel free to contact: Ben Rye, Sydney Birkett, or Tom Pavic at 403.266.6133.