Sacgasco has closed on the acquisition of a 20% Working interest (WI) in oil and gas producing assets ('Alberta Plains Assets') in southern Alberta, Canada. Plans for the acqusistion were previously reported on 28 January 2021. The Assets consists of oil and gas fields and associated production equipment, located between Edmonton and the USA border.
The principal crude oil and gas properties are located in the Little Bow, Taber and Bellshill areas. The vendor is Blue Sky Resources Limited. Current production is around 100 BOPD and steps are actively being taken to bring selected wells back into production at an expected gross (100%) rate of 500 BOPD before the end of February. The cost to Sacgasco of these restoration activities is AUD$170,000.
The majority of the oil and gas wells being acquired have been produced for many years. The average production for the last 5 years, before the Asset wells were shut-in during 2020 due to COVID-19 related low oil prices, was over 2,000 BOEPD. During 2019 the Asset wells averaged 1,400 BOEPD(16% Natural Gas) (Production information from official Canadian SEDAR Filings).
Further detail on the Reserves was provided in the ASX release titled 'Sacgasco to Acquire 100 BOEPD in reactivated Oil Fields' on 28 January 2021.
The purchase price is equivalent to around US$0.64 per Barrel of Proved Plus Probable Oil Reserves.
At current prices, the Assets are cash flow positive and are highly leveraged to increased oil prices.Essentially all of the producing reservoirs are conventional sandstones with natural acquifer pressure support, variously enhanced by formal waterfloods and produced water re-injection. Around 25% of the wells are drilled horizontally. Producing reservoirs are mostly shallower than 1,150 metres.
Gross leased acreage is approximately 29,000 acres and 3D Seismic covers all of the producing acreage at Taber, Bellshill and Little Bow Fields.
Borba 1-7 Well Update
Preparations continue to be on track for spudding the Borba 1-7 well in early February. The well is planned to be drilled directionally to Basement to intersect multiple stacked, 3D-seismic amplitudes which are interpreted to be indicative of Natural Gas accumulations in conventional sandstone reservoirs.
Sacgasco’s Managing Director, Gary Jeffery commented:
'Sacgasco is very pleased with the rapid progess in our strategy of acquiring opportunities in underexplored and undervalued assets supported by invaluable infrastructure and facilities. We look forward to working closely with our trusted and proven Operator Blue Sky in Alberta. The acquisitions we are making are the foundations for a solid oil producing business in Canada.The recent strength in the oil prices, up over 40% since we initiated the first agreement to acquire oil assets, with every indication that this will continue, places Sacgasco in an enviable position to benefitfrom our Operator’s ability to significantly enhance current production levels.The assets are non-operated and will allow Sacgasco to focus on its operated assets in the Sacramento Basin, especially the imminent spudding of the Borba Prospect well.'