Canada’s Bonavista Energy Corp. entered into an agreement to acquire certain liquids-rich natural gas-weighted properties in its Deep Basin and West Central Alberta core regions in exchange for properties within its noncore region in northeastern British Columbia.
This asset exchange has an effective date of Jan. 1 and is expected to close in the first week of October. There are no cash proceeds involved in the asset exchange, and the completion of the transaction is subject to customary regulatory approvals and other conditions.
Bonavista said Sept. 6 in a press release that the asset exchange aligns with its strategy to concentrate its portfolio in the Deep Basin and West Central core regions where there are capital-efficient, scalable development opportunities to be worked in a low-cost structure.
The acquired assets include access to about 330 sections of mineral rights located adjacent to Bonavista's existing land position in these areas. These assets include 252 gross (172.8 net) identified horizontal drilling opportunities with exposure to formations such as the Wilrich, Notikewin, Glauconite, Bluesky, Ellerslie and Cardium.
On the acquired assets in the Wilrich, Notikewin, Glauconite and Bluesky formations, about 149 gross (104.1 net) horizontal locations have been identified, Bonavista said.
In April the acquired assets produced 7,700 barrels of oil equivalent per day (boe/d), 69% natural gas, with a moderate annual decline of 19%. Current production is estimated at 7,200 boe/d.
The divested assets in Bonavista’s noncore region are in the Blueberry area of northeast British Columbia. In April, they produced 500 boe/d, 79% gas.
Bonavista added that the proximity of the acquired assets to its existing operations will yield about CA$8 million of capex in 2016 that will be used to enhance operating efficiencies by optimizing production and consolidating infrastructure. These expenditures will likely reduce operating expenses on the acquired assets by 25% in 2017 when compared to 2016.
The company said that the transaction offers immediate development opportunities with plans to allocate CA$30 million to CA$35 million of capex to complement the core 2017 drilling program.
TD Securities Inc. was Bonavista’s exclusive financial adviser on the transaction.
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