Liquids-rich natural gas and prolific oil properties in northwestern Alberta, known as the Charlie Lake field, inspired C$526 million (US$421 million) in deals announced this week by Calgary-based operators.
In one transaction, Tamarack Valley Energy Ltd. paid C$247.5 million ($198 million) cash and traded 105.3 million shares valued at C$2.34/share ($1.87) for Anegada Oil Corp. In turn, Topaz Energy Corp. bought a royalty interest in the Anegada assets from Tamarack for C$32 million ($25.6 million).
The Anegada properties, in the Peace River area 390 kilometers northwest of the Alberta capital in Edmonton, currently flow up to 2,000 b/d natural gas liquids (NGL), 7,200 b/d oil and 28 MMcf/d natural gas.
“The acquisition will provide Tamarack with a material position in Charlie Lake, one of the leading oil plays in North America,” said Tamarack CEO Brian Schmidt. “Our strategic portfolio approach of investing in high impact oil plays, combined with a focus on decline mitigation through our waterflood assets enhances corporate free cash flow sustainability and resiliency.
“Our team’s execution of integrating new assets into the company has been exceptional and we are confident this will continue.”
Tamarack already has an inventory of drilling locations focused primarily in the Cardium, Clearwater and Viking fairways in the Western Canadian Sedimentary Basin.
Topaz is acquiring a newly created 2% gross overriding royalty interest on crude oil, conventional natural gas and NGLs from 300,000 gross acres of Tamarack’s developed and undeveloped lands that are focused on Charlie Lake development. Average production from the royalty acquisition lands during March exceeded 13,000 boe/d.
Anegada CEO M. Brandon Swertz said the company’s shareholders had “indicated a desire to be a part of a larger high quality entity with greater free cash flow. We see the combination of the Clearwater and Charlie Lake oil plays providing Tamarack with top decile inventory with significant free cash flow growth and yield potential.”
Initial production from Anegada’s wells topped 650 b/d, each costing about C$2-3.5 million ($1.6-2.8 million).
The 332.4 square miles of acquired Anegada properties include 224 identified drilling locations. The Charlie Lake asset package that goes to Tamarack also includes ownership interests in four natural gas plants and about 260 kilometers (156 miles) of pipelines.
According to Tamarack, the Charlie Lake asset “ranks amongst the most economic light oil plays in North America, is situated in an active development area with well established production and egress infrastructure and is considered to be economically resilient to crude oil prices as low as $30 West Texas Intermediate.”
The two deals are scheduled to close in the next two months.
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