Calgary-based Provident Energy Trust on Tuesday announced the acquisition of two small Canadian independents, Olympia Energy Inc. and Viracocha Energy Inc., which together will increase Provident’s daily production to more than 34,000 boe/d, weighted 45% to natural gas, 33% to light/medium oil and natural gas liquids (NGLs) and 22% to crude.
Provident paid C$217.6 million for Olympia and C$205.9 million for Viracocha, and will pay for the transactions by issuing Provident units and assuming existing debt and working capital of both companies. Both of the transactions are expected to close in early June.
Based on independent engineering reports for both companies, Provident’s total proved reserves will increase 48%, to 62.1 MMboe from 41.8 MMboe, with a total proved reserve life index of five years. Proved probable reserves will increase by 49% to 81.6 MMboe from 54.9 MMboe, with a reserve life index of 6.2 years.
“With significant overlap of existing production, the addition of the Olympia and Viracocha assets will provide economies of scale and additional internal development opportunities within our core operating areas of West Central and Southern Alberta,” said CEO Tom Buchanan.
Olympia’s major production properties are located within Provident’s West Central Alberta core area, primarily in the Lochend, Wildcat Hills, and Bottrel areas. Olympia also has production in the Suffield, Atlee/Buffalo area as well as in Northern Alberta in Little Horse and Moon Creek.
Olympia operates 92% of its production, which at closing is expected to average 4,900 boe/d, weighted 62% to natural gas, 33% light/medium oil and NGLs, and 5% to crude. On Jan. 1, Olympia’s total proved reserves were 11.5 MMboe and proved plus probable reserves were 15.2 MMboe. Provident also will acquire about 119,000 net acres of undeveloped land.
Viracocha’s producing properties also overlap with Provident’s existing operations in the Southern and East Central Alberta regions. Operating 89% of its production, Provident estimates that at closing, Viracocha’s pro forma daily production will average approximately 5,400 boe/d , weighted 29% natural gas, 58% light oil and 13% crude.
At the beginning of this year, Viracocha’s total proved reserves were 8.8 MMboe, and proved plus probable reserves were 11.6 MMboe. Provident also will acquire approximately 79,000 net acres of undeveloped land from Viracocha.
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