Black Crane Energy Corp. (“BCEC” or the “Company”) has initiated a process to explore strategic alternatives which may include: (1) sale of the Company’s shares or its assets; (2) joint venture opportunities; or (3) an equity or debt investment in the Company to help accelerate development of its E&P assets and bitcoin mining pipeline (the “Process”). BCEC has retained ARCO Capital Partners Inc. (“ARCO”) as its financial advisor to assist with the Process.
BCEC’s portfolio includes: (1) operated light oil and natural gas production in Irricana (core) and Chigwell (minor) areas of central Alberta (the “E&P Properties”); and (2) a vertically integrated bitcoin mining operation (“Bitcoin Operation”).
Investment and property highlights:
- E&P Properties averaged 181 BOE/d in Q4/2021, consisting of 85 bbl/d of light oil (+32o API) and liquids and 573 Mcf/d of gas largely from 4 Ellerslie producers in Irricana at sub 10% decline
- $2.5 MM of annualized NOI in Q4/2021 ($38/BOE) with full year operating costs of $0.65 MM ($10.15/BOE)
- February average field production of ~195 BOE/d (65 bbl/d + 800 Mcf/d)
- 40 Mcf/d Bitcoin Operation generated $0.7 MM of annualized NOI in Q4/2021 ($46/Mcfe), providing sales diversification and improved gas-equivalent realizations
- Low environmental exposure with 14.6 net total wells of which 7.5 are producing, 3.0 are suspended and 4.1 have been abandoned
- LMR of 3.0x / ARO (PV0) of $2.0 MM / 21% inactive well ratio
- Internal reserve evaluation has booked 337 Mboe (45% liquids) in PDP with $4.7 MM NPV10 (BT) at Dec. 31, 2021, yielding a 6.2 year PDP reserve life
- Upside in E&P and Bitcoin includes:
- Continued drilling in Ellerslie along Irricana trend where BCEC has identified +12 pools using seismic, well control and proprietary database of +300 drill cuttings
- Number of identified low risk recompletion and reactivation candidates
- 31 horizontal locations in Chigwell targeting liquid-rich Falher channel, analogous to Bonavista’s Morningside development with potential to achieve +20 MMcf/d for ~5 consecutive years based on full field development
- Additional mining opportunities using ~700 Mcf/d of existing gas from BCEC’s portfolio wells which could generate ~$1.2 MM per month in Bitcoin mining revenue at $55,000/BTC
- No debt with $1.3 MM net cash position at Dec. 31, 2021
- Tax pools of $21 MM including $14 MM of NCLs
The deadline for non-binding proposals is April 14, 2022.
Further details on the process can be found in the Information Memorandum or by contacting ARCO directly at arcocapital.ca.