Sign Up for FREE Daily Energy News
 
BREAKING NEWS:
Hazloc Heaters
Copper Tip Energy Services
WEC - Western Engineered Containment
Hazloc Heaters
Copper Tip Energy
WEC - Western Engineered Containment

Tamarack Valley Energy announces strategic asset acquisition in West Central, Alberta & updated 2020 pro forma guidance


CALGARY, AB – Tamarack Valley Energy (“Tamarack” or the “Company”) (TSX: TVE) is pleased to announce it has entered into a purchase agreement to acquire assets located in West Central, Alberta (the “Assets”). The Assets include approximately 2,500 boe/d (52% oil and natural gas liquids, “NGLs”) of low-decline production supported by a high-quality, multi-zone light oil and liquids rich gas drilling inventory and approximately 105,000 net acres of land, acquired for total cash consideration of $4.25 million (the “Acquisition”). The Acquisition continues to advance Tamarack’s strategy of enhancing its overall sustainability and free adjusted funds flow profile under current commodity prices and features attractive acquisition metrics.

Highlights

The Acquisition is consistent with Tamarack’s strategy to develop a portfolio focused on enhancing full cycle profitability, while maintaining a healthy balance sheet even at low commodity prices. Based on the Company’s proven ability to improve efficiencies, reduce operating costs and increase netbacks across its existing asset base, Tamarack plans to apply the same principles to the Assets with the view to achieving similar results. Highlights of the Assets and Acquisition include:

  • Stable current production volumes of approximately 2,500 boe/d (52% oil and NGLs)1 with a low decline rate estimated at approximately 13%;
  • Approximately 105,000 net acres of land concentrated in key development plays within Tamarack’s West Central core area featuring approximately 50 high-quality, multi-zone light oil and liquids rich natural gas drilling locations;
  • Opportunity to synergistically reduce operating expenditures on the Assets by integrating production from the Acquisition into Tamarack’s operated infrastructure network in the greater West Central core fairway;
  • Based on internally estimated reserves with respect to the Assets based on GLJ July 1st 2020 Pricing, the Acquisition provides the following:
    • 6.6 MMboe of proved developed producing (“PDP”) reserves2;
    • 7.5 MMboe of total proved reserves2;
    • 10.7 MMboe of total proved plus probable (“TPP”) reserves2;
    • TPP reserve life index (“RLI”) of 11 years2; and
  • Commitment to further enhancing the Company’s asset retirement obligation (“ARO”) investment with an estimated increase of $1.5 million in 2020.

______________________________

1 Comprised of 560 bbls/d of light and medium crude oil, 739 bbls/d of NGLs and 7.2 MMcf/d of natural gas.

2 PDP reserves, total proved reserves, TPP reserves and RLI are derived from the Company’s internal Qualified Reserve Evaluators (“QRE”) and prepared in accordance with National Instrument 51-101 (“NI 51-101”) and the Canadian Oil and Gas Evaluations Handbook (“COGEH”). “Internally estimated” means an estimate that is derived by the Company’s internal QRE and prepared in accordance with NI 51-101. All internal estimates contained in this new release have been prepared effective as of June 1st, 2020.

Acquisition Metrics

Estimated Production (at closing)

2,500 boe/d

Flowing Multiple

$1,700 per boe/d

PDP Reserves(1)

$0.64/boe

Total Proved Reserves(1)

$0.57/boe

Total Proved + Probable Reserves(1)

$0.40/boe

Annual Net Operating Income Multiple(2)(3)

1.4x

Notes:

(1) PDP Reserves, Total Proved Reserves, Total Proved + Probable Reserves are derived from the Company’s internal QRE and prepared in accordance with NI 51-101 and the COGEH.

 (2) Based on 12 month strip from July 3rd 2020.

(3) See Non-IFRS Measures.

Pro-Forma 2020 Updated Guidance

Tamarack’s revised 2020 guidance is set out below and reflects the inclusion of the Assets effective June 1st.

July 9, 2020
Updated Guidance

Full Year Capital Budget (including Acquisitions & ARO spend) ($MM)

$101

Annual Average Production (boe/d)

20,850 – 21,250

Annual Average Oil & Natural Gas Liquids Weighting (%)

~60-62%

Free Adjusted Funds Flow(1) ($MM)

$15-20

Net Debt to Trailing Annual Adjusted Funds Flow Ratio(1) (times)

~1.5x

2021 Estimated Corporate Decline Rate(2)

22-24%

2021 Estimated Corporate Sustaining Capital Breakeven Price ($/Bbl)(1)

~US$37.00

(1)          See Non-IFRS Measures

(2)          Based on December 2020 to December 2021 estimates

This guidance is based on average 2020 commodity price assumptions of WTI US$39.00/bbl, MSW/WTI differential of US$6.00/bbl and AECO at $2.00/GJ as well as a Canadian/US dollar exchange rate of $1.3625.

About Tamarack Valley Energy Ltd.

Tamarack is an oil and gas exploration and production company committed to long-term growth and the identification, evaluation and operation of resource plays in the Western Canadian Sedimentary Basin. Tamarack’s strategic direction is focused on two key principles: (i) targeting repeatable and relatively predictable plays that provide long-life reserves; and (ii) using a rigorous, proven modeling process to carefully manage risk and identify opportunities. The Company has an extensive inventory of low-risk, oil development drilling locations focused primarily in the Cardium and Viking fairways in Alberta that are economic over a range of oil and natural gas prices. With this type of portfolio and an experienced and committed management team, Tamarack intends to continue delivering on its strategy to maximize shareholder returns while managing its balance sheet.

Abbreviations

AECO

the natural gas storage facility located at Suffield, Alberta connected to TC Energy’s Alberta System

bbls/d

barrels per day

boe

barrels of oil equivalent

boe/d

barrels of oil equivalent per day

GJ

gigajoule

IFRS

International Financial Reporting Standards as issued by the International Accounting Standards Board

MMboe

million barrels of oil equivalent

MMcf/d

million cubic feet per day

MSW

Mixed sweet blend, the benchmark for conventionally produced light sweet crude oil in Western Canada

WTI

West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for the crude oil standard grade

Disclosure of Oil and Gas Information

Unit Cost Calculation. For the purpose of calculating unit costs, natural gas volumes have been converted to a boe using six thousand cubic feet equal to one barrel unless otherwise stated. A boe conversion ratio of 6:1 is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion conforms with Canadian Securities Administrators’ National Instrument 51–101 – Standards of Disclosure for Oil and Gas Activities. Boe may be misleading, particularly if used in isolation.

Oil and Gas Metrics. This press release contains metrics commonly used in the oil and natural gas industry, such as reserve life index. “Reserve life index” is calculated as total Assets interest reserves divided by annual production.

Any references in this press release to production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Tamarack.



Share This:



More News Articles


New SHOWCASE Directory Companies

 

Challenger Geomatics
CDN Controls
Caliper Inspection
Environmental Mats
Gemini Fabrication
Canline Pipeline Solutions
DyCat Solutions