Offering Details

Journey Energy Inc.
Property Divestiture
Bid Deadline: 11/15/2018 12:00 PM

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OVERVIEW

Sayer Energy Advisors has been engaged to assist Journey Energy Inc. (“Journey” or the “Company”) with the sale of certain non-core operated properties located in the Brooks, Gilby, Gull Lake, Niton and Pembina Keystone Cardium Unit No. 1 (“PKCU”) areas of Alberta, and non-operated interests in the Pembina area of Alberta (the “Properties”).  The Company’s intent is to whitemap all of the assets in each property.

The Properties consist of high working interests in low decline oil and natural gas production and associated infrastructure.

Total production net to Journey from the Properties has recently averaged approximately 1,440 boe/d, consisting of 3.9 MMcf/d of natural gas and 792 barrels of oil and natural gas liquids per day.

Recent net operating income from the Properties has averaged approximately $569,000/month or approximately $6.8 million on an annualized basis.

Brooks
In the Brooks area, Journey holds various working interests in 35 sections of land.  Recent production net to Journey from Brooks has averaged approximately 511 boe/d, consisting of 1.1 MMcf/d of natural gas and 330 barrels of oil and natural gas liquids per day.  Production from the Brooks property is primarily from the Mannville, Pekisko, Bow Island and Sunburst formations.

Gilby
At Gilby, Journey holds various working interests in 27.75 sections of land.  The Company also has a 31.17% working interest in the Gilby Jurassic "B" Unit No. 1, a 100% working interest in the Gilby Basal Mannville "B" Unit No.1, a 51.83% working interest in the Gilby Lower Mannville Ostracod Unit No. 1, a 65.35% working interest in the Gilby Jurassic "F" Unit, and a 14.74% working interest in the Willesden Green Viking “H” Unit No. 1.  Recent production net to Journey from Gilby has averaged approximately 224 boe/d, consisting of 495 Mcf/d of natural gas and 141 barrels of oil and natural gas liquids per day.

Gull Lake
Journey holds various working interests in 14.75 sections of land at Gull Lake.  Recent production net to Journey from Gull Lake has averaged approximately 125 boe/d, consisting of 511 Mcf/d of natural gas and 40 barrels of oil and natural gas liquids per day.  Production at Gull Lake is primarily from the Glauconitic Sandstone and Ellerslie formations.

Niton
At Niton, the Company holds various working interest in 50 sections of land.  Journey also operates and has a 53.94% working interest in the Niton Rock Creek “N” Pool Unit, which is currently under waterflood.  Recent production net to Journey from Niton has averaged approximately 300 boe/d, consisting of 891 Mcf/d of natural gas and 151 barrels of oil and natural gas liquids per day.

PKCU
Journey operates and holds a 63.37% working interest in the Pembina Keystone Cardium Unit No. 1, as well as various working interests in PNG rights to the base of the Viking Formation in certain areas.  Recent production net to Journey from the PKCU property has averaged approximately 195 boe/d, consisting of 624 Mcf/d of natural gas and 91 barrels of oil and natural gas liquids per day.

Pembina
Journey has various non-operated interests in 61 sections of land in the Pembina area.  Recent production net to Journey from Pembina has averaged approximately 84 boe/d, consisting of 273 Mcf/d of natural gas and 39 barrels of oil and natural gas liquids per day.

Overview Map Showing Location of the Divestiture Properties

LLR Overview as of September 1, 2018

Production, Reserves & NOI Overview

Total production net to Journey from the Properties has recently averaged approximately 1,440 boe/d, consisting of 3.9 MMcf/d of natural gas and 821 barrels of oil and natural gas liquids per day.

Recent net operating income from the Properties has averaged approximately $569,000/month or approximately $6.8 million on an annualized basis.

Reserves Overview

GLJ Petroleum Consultants Ltd. (“GLJ”) prepared an independent reserves evaluation of Journey’s properties as part of the Company’s year-end reporting (the “GLJ Report”).  The GLJ Report is effective December 31, 2017 using an average of three Consultant’s forecast pricing at January 1, 2018.  The Company has since sold interests at Gull Lake and Gilby which are still shown in the GLJ Report.  The values shown in the table below are adjusted to reflect the asset sales.

GLJ estimates that, as of December 31, 2017, the Properties contained remaining proved plus probable reserves of 3.1 million barrels of oil and natural gas liquids and 13.5 Bcf of natural gas (5.4 million boe), with an estimated net present value of $42.6 million using forecast pricing at a 10% discount.