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UNITED STATES/
TORONTO, Dec. 12,
2022 /CNW/ - Canada Energy Partners Inc. (NEX:
CE.H) (the "Corporation") today announced a private placement
to secure up to $23.5M from the
issuance of units. Each unit will consist of a common share at an
issuance price of $0.10/share. In the
event that the Corporation secures debt financing under customary
commercial terms, the amount of the offering will be reduced.
The Corporation also announces that it has been granted
conditional approval by the TSX Venture Exchange ("Exchage") to
complete the previously announced acquisition of 70% working
interests in three natural gas development wells to be drilled in
the Grand Slam Project, 93 miles southwest of Houston, Texas. The Corporation is required to
contribute U$13.5M to fund the capital costs for completing the
drilling program.
The net proceeds of the private placement will be used to fund
the acquisition in Texas and for
general working capital. The Corporation will pay eligible parties
customary finder's fees in connection with the private private
placement. The private placement is subject to approval of the
Exchange. All securities issued under the private placement will be
subject to a four month hold period in accordance with applicable
securities laws.
Texas Acquisition Overview
The Corporation has executed a Participation Agreement
("PA") and Joint Operating Agreement with Arcadia Operating,
LLC ("Arcadia") and the Standard Mutual Assurance Company, LLC to
drill three development wells on the Grand Slam oil and gas
production leases in Matagorda County, Texas. The Grand Slam field is located 90
miles SW of Houston and the three proposed well sites are
in the middle of existing oil and gas infrastructure, pipelines and
gathering stations. The Grand Slam field entered production in 2000
and has a history of prolific production.
The fundamental terms of the PA are as follows: (i) the
Corporatoin will advance USD$13.5M to acquire interests in the
three development wells; (ii) upon commencement of production, the
Corporation will receive first priority to 70.74% of the net
production revenues; and (iii) upon repayment of the Corporation's
capital contributions, the working interest entitlements will be
adjusted to 53.06%.
Opportunity Highlights
- Located in one of the world's major mega basins
- Asset surrounded by major upstream and midstream
infrastructure
- Up to $28 Million of NPV (10)
potential
- Gross reserves of 21 BCF and 674 MBO associated with proposed
development plan
- Additional unquantified contingent resources provide
optionality and running room
- Highly experienced and proven management
- Project largely de-risked
Grand Slam (Figure 1) offers and attractive opportunity to
acquire 53.06% working interest by drilling three (3) development
wells in the thickest portion of the Claughton A&B reservoirs
(Frio Fm), that will recover ~21 BCF & 647,000 Bbls of gross
reserves at a total capital expenditure of approximately $13.5
million. Each new well is estimated to cost ~$4.7
million to drill and complete (D&C). It is expected the
new wells will produce a balance mix of gas (85%) and liquids
(15%), providing a high-margin stable
cashflow. Arcadia is the non-operated partner and brings
nearly 100 years of operating experience in the basin.
Grand Slam is a liquid-rich gas field discovered in 2000 by the
completion of the Runnells Gas Unit Well No.3. The discovery well
initially produced 22 MMscfpd. Located in the heart of
the Frio trend wedged between several large gulf coast
fields 90 miles SWof Houston in Matagorda County.
Grand Slam is covered by proprietary 3D seismic, it produced ~21
BCF of gas and 665,000 Bbls of condensate, out of seven wells
within the leased acreage (704 acres). Historically, some of the
wells had an initial production (IP) ~20 MMscfpd and 620 Bcpd.
(Figure 1).
Reserves volumes reported in Table 1 are the result of a
third-party reserves evaluation as of June 1, 2022, performed
by Chapman Petroleum Engineering Ltd. ("Chapman") of Calgary,
Alberta and was conducted in accordance with the definitions,
standards and procedures contained in the Canadian Oil and Gas
Evaluators Handbook ("COGEH") and National Instrument 51-101 -
Standards for Disclosure of Oil and Gas Activities ("NI
51-101").
|
|
|
Net to Appraised Interest (CEP's
Share)
|
|
|
|
Reserves
|
Cumulative Cash Flow
- M$
|
|
NaturalGas
MMscf
Sales Volume
|
Condensate
MBbls
Sales Volume
|
Conventional
Natural Gas
MMscf
|
|
Condensate
MBbls
|
Undiscounted
|
Discounted
at:
10%/year
|
Description
|
PROVED
|
Gross
|
Net
|
|
Gross
|
Net
|
|
|
|
|
|
|
|
|
|
|
Proven
Undeveloped
|
|
|
|
|
|
|
|
|
|
Project, Matagorda
Texas
|
12,928
|
404
|
7,044
|
5,515
|
|
220
|
172
|
24,945
|
16,785
|
Total Proved
Undeveloped
|
12,928
|
404
|
7,044
|
5,515
|
|
220
|
172
|
24,945
|
16,785
|
Total
Proved
|
12,928
|
404
|
7,044
|
5.515
|
|
220
|
172
|
24,945
|
16,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROBABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Probable
Underdevelped
|
|
|
|
|
|
|
|
|
|
Project, Matagorda
Texas
|
5,172
|
162
|
2,484
|
1,911
|
|
78
|
60
|
14,727
|
6,927
|
Total Probable
Underdeveloped
|
5,172
|
162
|
2,484
|
1,911
|
|
78
|
60
|
14,727
|
6,927
|
Total
Probable
|
5,172
|
162
|
2,484
|
1,911
|
|
78
|
60
|
14,727
|
6,927
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus
Probable
|
18,100
|
566
|
9,528
|
7,426
|
|
298
|
232
|
40,672
|
23,712
|
|
|
|
|
|
|
|
|
|
|
POSSIBLE
|
|
|
|
|
|
|
|
|
|
Project, Matagorda
Texas
|
2,586
|
81
|
1,242
|
939
|
|
39
|
29
|
7,116
|
4,204
|
Total
Poasible
|
2,586
|
81
|
1,242
|
939
|
|
39
|
29
|
7,116
|
4,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus
Probable Plus Possible
|
20,686
|
647
|
10,770
|
8,365
|
|
337
|
261
|
47,788
|
27,916
|
|
|
|
|
|
|
|
|
|
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M$ neans thousands of
dollars
|
|
|
|
|
|
|
|
|
|
Sales Volume are the
total gross sold hydrocarbons produced
|
|
|
|
|
|
|
|
|
|
Gross reserves are the
total of the Company's working interest share before deduction of
royalties owned by others
|
|
|
|
Net reserves are the
total of the Company's working interest share after deducting the
amounts attributable to royalties owned by others
|
Table 1. Chapman's reserves report summary
The table shows the Total Proved Undeveloped (PUD), Probable
(2P) and Possible (3P) reserves in Gross and Net to CEP. Chapman's
reserves evaluation only considers the proposed three (3) well
development plan. Other resources could be produced with additional
infill drilling locations as estimated by the Operator.
Arcadia is a 93-year-old independent Texas based
oil and gas company with its antecedent founding in 1929 shortly
after the discovery of the great East Texas oil field.
The company which was a part of the early Texas petroleum
industry pioneers was headquartered in Tyler, Texas for
61 years before moving to Dallas, Texas in 1991. The
company's operational activities have been primarily focused on the
Gulf Coast, Eastern, and Southern regions of Texas where
it has overseen thousands of wells in all phases of development
Three of the nine wells previously drilled on the property 10
years ago had initial flow rates of 20 mmcf of natural gas and 500
barrels of condensate liquids before two were lost to mechanical
issues and the other well faulted out. In all, seven of the nine
wells drilled previously flowed natural gas and concentrate
liquids. With today's natural gas and oil price structure, wells
that had similar production would yield attractive returns. .
Canada Energy has no way of knowing what the success rate or flow
rate of any of the three wells will be but the operator for
the property, Arcadia Operating LLC of Dallas will be drilling into the exact same
formation with the knowledge gained from recent 3D seismic,
previous well information, and modern resivor modeling
techniques.
A National Instrument 51-101Reserve Report was completed by
Chapman Engineering of Calgary,
Alberta for the Grand Slam Project. A copy of the Reserve
Report can be downloaded fronm the company's website.
www.canadaenergypartners.com
On behalf of the Board of Directors of
Canada Energy Partners Inc.
Grant Hall
President
and CEO
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as such term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Canada Energy Partners Inc.