Offering Details
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Under Review / Vermilion Energy Inc.
Vermilion Energy Inc.
Property DivestitureBid Deadline: October 26, 2023
12:00 PM
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OVERVIEW
Vermilion Energy Inc. (“Vermilion” or the “Company”) has engaged Sayer Energy Advisors to assist it with the sale of its operated working interests located in the Greater Kindersley area of West Central Saskatchewan (the “Property”).In the Greater Kindersley area, Vermilion has various operated working interests in the Dodsland, Kerrobert, Lucky Hills, Plato North, Superb and Whiteside areas. The Greater Kindersley area is productive primarily from the Viking Formation.
Forecasted average daily sales production net to Vermilion from the Greater Kindersley area on a proved developed producing basis for the four months ended December 31, 2023 is approximately 188 barrels of oil and natural gas liquids per day and 19 Mcf/d of natural gas (191 boe/d).
Forecasted operating income net to Vermilion from the Greater Kindersley area on a proved developed producing basis for the four months ended December 31, 2023 is approximately $1.0 million, or $3.0 million on an annualized basis.
Overview Map Showing the Location of the Divestiture Property
GREATER KINDERSLEY
Township 27-34, Range 19-28 W3
In the Greater Kindersley area, Vermilion has various operated working interests in the Dodsland, Kerrobert, Lucky Hills, Plato North, Superb and Whiteside areas. The Greater Kindersley area is productive primarily from the Viking Formation.
At Greater Kindersley, Vermilion holds primarily operated, high-working interests in various Viking oil pools as shown on the following map.
Forecasted average daily sales production net to Vermilion from the Greater Kindersley area on a proved developed producing basis for the four months ended December 31, 2023 is approximately 188 barrels of oil and natural gas liquids per day and 19 Mcf/d of natural gas (191 boe/d).
Forecasted operating income net to Vermilion from the Greater Kindersley area on a proved developed producing basis for the four months ended December 31, 2023 is approximately $1.0 million, or $3.0 million on an annualized basis.
Greater Kindersley Area, Saskatchewan – Gross Production Group Plot of
Vermilion’s Oil & Natural Gas Wells
Greater Kindersley Area Upside
Vermilion has identified additional horizontal infill drilling locations with as many as 10 horizontal wells per section on its lands in the Greater Kindersley area. Further details on the upside locations will be available in the virtual data room for parties that execute a confidentiality agreement.
The Company believes that developing the Property at a pace of approximately nine horizontal wells per year would result in net production of up to 1,000 bbl/d of oil. The following chart shows the development potential of the Property with the current production base in black and the development scenario in green.
Dodsland
Vermilion’s lands and wells in the Dodsland area are shown on the following map.
The Company believes the Viking pools can be further developed with additional horizontal infill drilling. The Viking infill locations identified on Vermilion’s lands in the Dodsland area are shown in blue on the following map.
The following graph shows the expected type curve of a one-mile horizontal development well at Dodsland.
Kerrobert/Superb
Vermilion’s lands and wells in the Kerrobert/Superb area are shown on the following map.
The Company believes the Viking pools can be further developed with additional horizontal infill drilling. The Viking infill locations identified on Vermilion’s lands in the Kerrobert/Superb area are shown in blue on the following map.
The following graph shows the expected type curve of a one-mile horizontal development well at Kerrobert.
Lucky Hills/Whiteside
Vermilion’s lands and wells in the Lucky Hills/Whiteside area are shown on the following map.
The Company believes the Viking pools can be further developed with additional horizontal infill drilling. The Viking infill locations identified on Vermilion’s lands in the Lucky Hills/Whiteside area are shown in blue on the following map.
The following graph shows the expected type curve of a one-mile horizontal development well at Lucky Hills.
Plato North
Vermilion’s lands and wells in the Plato North area are shown on the following map.
The Company believes the Viking pools can be further developed with additional horizontal infill drilling. The Viking infill locations identified on Vermilion’s lands in the Plato North area are shown in blue on the following map.
The following graph shows the expected type curve of a one-mile horizontal development well at Plato North.
Greater Kindersley Seismic
In the Greater Kindersley area, Vermilion has an interest in various 2D and 3D seismic data as shown on the following plat. More details pertaining to the seismic will be available in the virtual data room for parties that execute a confidentiality agreement.
Greater Kindersley, Saskatchewan
Seismic Coverage
Greater Kindersley Marketing
Oil production from the Greater Kindersley area is Mid Sask Sweet Crude, with a composition of approximately 855 kg/m3 density and 0.18% Sulphur content.
Operated production from the Greater Kindersley area is sold under two one-year area dedication agreements expiring April 30, 2024.
Production from all Vermilion operated locations are area dedicated and sold to Gibson Energy Inc., where emulsion is trucked to the Gibson North Custom Treater & Terminal at 13-12-030-22W3.
All volumes from the Gibson Plato truck terminal flow into the Interpipeline Mid-Sask Pipeline where it flows by pipe to Kerrobert, SK.
Natural gas from the operated wells in the Greater Kindersley area is consumed on site.
Certain non-operated production is directed to the Secure Energy Services Inc. pipeline and those volumes are either shipped by Vermilion or sold under evergreen agreements with Tidal Energy Marketing Inc. and Secure, both terminable with 30 days notice.
Greater Kindersley Reserves
McDaniel & Associates Consultants Ltd. (“McDaniel”) prepared an independent reserves evaluation of the Property (the “McDaniel Report”). The McDaniel Report is effective August 31, 2023 using an average of McDaniel, GLJ Ltd. and Sproule Associates Limited (“Three Consultant Average”) forecast pricing at July 1, 2023.
McDaniel estimated that, as at August 31, 2023, the Property contained remaining proved plus probable reserves of 3.2 million barrels of oil and natural gas liquids and 23 MMcf of natural gas (3.2 million boe), with an estimated net present value of $49.1 million using forecast pricing at a 10% discount.
Greater Kindersley LMR
As of August 28, 2023, the Greater Kindersley property had a deemed net asset value of $4.1 million (deemed assets of $15.4 million and deemed liabilities of $11.3 million), with an LMR ratio of 1.36.
Additional abandonment and reclamation information relating to the Property will be available in the virtual data room for parties that execute a confidentiality agreement.
Greater Kindersley 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 October 26, 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 October 26, 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 (tpavic@sayeradvisors.com) or fax (403.266.4467).Included in the confidential information is the following: summary land information, the McDaniel Report, LMR information, most recent net operations summary and other relevant technical information.
Download Confidentiality Agreement
To receive further information on the Property please contact Tom Pavic, Ben Rye or Sydney Birkett at 403.266.6133.