Offering Details
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Under Review / Lycos Energy Inc.
Lycos Energy Inc.
Property DivestitureBid Deadline: August 10, 2023
12:00 PM
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OVERVIEW
Lycos Energy Inc. (“Lycos” or the “Company”) has engaged Sayer Energy Advisors to assist the Company with the sale of certain non-core oil and natural gas interests located in the Mikwan/Elnora area of Alberta (the “Property”). The Property consists of operated, 100% working interest oil production from the Duvernay Formation and extensive prospective Duvernay acreage. Lycos is selling the Property in order to focus its operations in its core areas.Average daily production net to Lycos from the Property for the first four months of 2023 was approximately 48 barrels of oil per day.
Operating income net to Lycos from the Property for the first four months of 2023 averaged approximately $33,400 per month, or approximately $400,000 on an annualized basis.
Overview Map Showing the Location of the Divestiture Property
MIKWAN/ELNORA
Township 34-38, Range 22-24 W4At Mikwan/Elnora, Lycos holds a 100% working interest in approximately 27,000 gross acres (42 sections) consisting of 39 sections of Crown land and three sections of Freehold land on which there are four wells currently producing oil from the Duvernay Formation.
Average daily production net to Lycos from the Property for the first four months of 2023 was approximately 48 barrels of oil per day.
Operating income net to Lycos from the Property for the first four months of 2023 averaged approximately $33,400 per month, or approximately $400,000 on an annualized basis.
Overview Map Showing the Location of the Divestiture Property
Mikwan/Elnora, Alberta – Gross Production Group Plot of Lycos’ Oil and Natural Gas Wells
Duvernay Formation
The Duvernay basin fill is regionally disconnected by large reef complexes which form several distinct embayments. The Property is located in the East Shale Basin within the Ghost Pine Embayment, as identified in pink on the following image.
Further details on the regional geology including the Duvernay Formation in the Ghost Pine Embayment at Mikwan/Elnora will be made available to parties that execute a confidentiality agreement.
The Duvernay pay intervals at Mikwan/Elnora include the upper shale with as much as 18 metres of net pay identified, and the lower shale which has up to 20 metres of net pay. The Upper and Lower Duvernay shales at Mikwan/Elnora are shown in the following well logs for the well Chronos Elnora 12-09-035-22W4.
Chronos Elnora 12-09-035-22W4 – Duvernay Formation Type Log
The Company has identified 230 million barrels of recoverable oil in place in the Lower and Upper Duvernay shales on its lands. Details of the parameters and oil in place calculations will be made available in the virtual data room for parties that sign a confidentiality agreement.
The Property falls within the Duvernay thermal maturity window, as identified in pink on the following image.
The Duvernay reservoir at Mikwan/Elnora is normally pressured at 8-10 MPa as outlined in pink on the following pressure gradient map.
Mikwan Reserves
Sproule Associates Limited (“Sproule”) prepared an independent reserves evaluation of the Property (the “Sproule Report”). The Sproule Report is effective March 1, 2023 using Sproule’s February 28, 2023 forecast pricing.
Sproule estimates that, as at March 1, 2023, the Mikwan property contained remaining proved plus probable reserves of 8,000 barrels of oil, with an estimated net present value of $41,000 using forecast pricing at a 10% discount.
Elnora Reserves
Sproule Associates Limited (“Sproule”) prepared an independent reserves evaluation of the Property (the “Sproule Report”). The Sproule Report is effective March 1, 2023 using Sproule’s February 28, 2023 forecast pricing.
Sproule estimates that, as at March 1, 2023, the Elnora property contained remaining proved plus probable reserves of 45,000 barrels of oil, with an estimated net present value of $967,000 using forecast pricing at a 10% discount.
Mikwan/Elnora Facilities
At Mikwan/Elnora, the Company’s facilities are all single well batteries. In addition, Lycos holds a discontinued natural gas pipeline at 12-09-035-22W4 which is connected to the Bornite Energy Ltd. pipeline at 08-09-035-22W4. The Company believes the pipeline could be easily re-activated.
Mikwan/Elnora Seismic
Lycos has trade 2D seismic data over its lands at Mikwan/Elnora. Interpretations of the data will be available for review for parties that execute a confidentiality agreement.
Mikwan/Elnora Marketing
The Company trucks its oil from Mikwan/Elnora to the Secure Energy Services Inc. Big Valley facility or the Inter Pipeline Ltd. Stettler facility.
Mikwan/Elnora LMR as of June 3, 2023
As of June 3, 2023, the Property had a deemed net asset value of $1.6 million (deemed assets of $2.7 million and deemed liabilities of $1.1 million), with an LMR ratio of 2.49.
Mikwan/Elnora Well List
Click here to download the complete well list in Excel.
PROCESS & TIMELINE
Sayer Energy Advisors is accepting cash offers to acquire the Property until 12:00 pm on Thursday August 10, 2023.
Sayer Energy Advisors does not conduct a "second-round" bidding process; the intention is to attempt to conclude a
transaction with the party submitting the most acceptable proposal at the conclusion of the process.
transaction with the party submitting the most acceptable proposal at the conclusion of the process.
Sayer Energy Advisors is accepting cash offers from interested parties until
noon on Thursday August 10, 2023.
NOTE REGARDING A SAYER PROCESS
On each and every offering brochure generated by Sayer, you will note the sentence “Sayer Energy Advisors does not conduct a “second-round” bidding process; the intention is to attempt to conclude a sale of the Property with the party submitting the most acceptable proposal at the conclusion of the process.” What this means is that Sayer will not go back to multiple parties at the same time after bids are received, asking them all for a second bid. We determine which party submitted the most acceptable proposal and then we attempt to negotiate acceptable terms with that party in a “one-off” situation.
If the process involves a cash sale of a property or company and the party which submitted the most acceptable proposal has met our client’s threshold value, that offer will be accepted. If this proposal does not meet our client’s threshold value, then we will advise that party that the offer is not quite what our client was expecting, and we will ask them to increase the offer. If that offer is not acceptable to our client, we will then move down to the party which submitted the next most acceptable proposal and we will then work with that party to attempt to meet our client’s threshold value.
In the extremely rare circumstance where two or more parties submit virtually identical proposals, we will contact all parties, we will advise them of this situation and we will ask them to submit a revised proposal. Once these are received, we will work with the party which has submitted the most acceptable proposal.If the process involves a cash sale of a property or company and the party which submitted the most acceptable proposal has met our client’s threshold value, that offer will be accepted. If this proposal does not meet our client’s threshold value, then we will advise that party that the offer is not quite what our client was expecting, and we will ask them to increase the offer. If that offer is not acceptable to our client, we will then move down to the party which submitted the next most acceptable proposal and we will then work with that party to attempt to meet our client’s threshold value.
CONFIDENTIALITY AGREEMENT
Parties wishing to receive access to the confidential information with detailed information relating to this opportunity should execute the
Confidentiality Agreement and return one copy to Sayer Energy Advisors by courier, email (brye@sayeradvisors.com) or fax (403.266.4467).
Included in the confidential information is the following: summary land information, the Sproule Report, LMR information, most recent net operations summary, detailed facilities information and other relevant geological and technical information.
Download Confidentiality Agreement
To receive further information on the Property please contact Ben Rye, Tom Pavic or Sydney Birkett at 403.266.6133.