Offering Details
Back
Under Review / Aspenleaf Energy Limited
Aspenleaf Energy Limited
Property DivestitureBid Deadline: May 12, 2022
12:00 PM
Download Full PDF - Printable
OVERVIEW
Aspenleaf Energy Limited (“Aspenleaf” or the “Company”) has engaged Sayer Energy Advisors to assist the Company with the sale of its non-core oil and natural gas interests located in the Swan Hills area of Alberta defined as Area 1 - Swan Hills Minors and Area 2 - Section 02-068-09W5 (the “Properties”). Aspenleaf is entertaining separate offers for the individual areas.
The Properties consist of light, sweet oil production with low-decline (approximately 15%) and include 23 booked drilling locations.
The Properties are mainly 100% working interest, operated production. Average daily production net to Aspenleaf from the Properties for the quarter ended December 31, 2021 was 256 barrels of oil and natural gas liquids per day and 70 Mcf/d of natural gas (268 boe/d).
Operating income net to Aspenleaf from the Properties for the quarter ended December 31, 2021 averaged approximately $200,000 per month, or $2.4 million on an annualized basis. There is an existing waterflood in the Morse River Unit No. 1 with a current recovery factor of 22%. Aspenleaf has identified un-booked upside in future re-activations and development to increase possible recovery in the Unit to 30%+ based on analogue pools.
The Properties are surrounded by Swan Hills production from several offsetting operators including Canadian Natural Resources Limited, Crescent Point Energy Corp., Razor Energy Corp. and Ridgeback Resources Inc.
Overview Map Showing the Location of the Divestiture Property
SWAN HILLS
Swan Hills Geology
The Swan Hills Platform lies at a depth of between 2,350 to 2,600 metres, with porosities ranging from the economic cutoff of 3% to 20%, with an average of 5%. Pay thickness ranges from 1 to 10 metres with water saturation interpreted as 20% throughout the area. The Properties lie significantly up-dip of the natural water level.
The distribution of the Middle Devonian Swan Hills reefs and platform and the location of the Properties are shown on the following map.
Swan Hills Reefs and Platform Map
The Properties lie within the Swan Hills Platform which is composed of limestone ranging in thickness from less than 15 metres at the eastern platform edge to as much as 50 metres thick as the platform begins to act as the base for the overlying Swan Hills reefs. These strata were deposited in five stratigraphic layers, each with its own geological characteristics.
The following type log shows the five separate stratigraphic units of the Middle Devonian Swan Hills Platform.
These stratigraphic intervals were laid down as relatively flat intervals each up to 10 metres in thickness. The intervals wedge out to the east at different positions, essentially backstepping from the eastern edge of the platform towards the position of the reefs as the strata goes from oldest to youngest.
Swan Hills Platform Type Log
The Swan Hills reefs are younger in age and sit upon the platformal succession. As a result, this does not affect the distribution of reservoir in the platform as has been suggested in previous industry studies.
These platformal limestones are overlain by the downlapping beds of the basinal shaly limestones and calcareous shales of the Waterways Formation. The nature of the downlap is important to understand to ensure the proper identification of the top of the platform.
The regional depositional patterns are shown in the following regional cross section.
Lower Swan Hills Platform Interval
Aspenleaf refers to the oldest interval of the platformal succession as the Lower. The Lower is essentially equivalent to what is also called the Basal Coral Zone. The Lower is composed of fossiliferous rudstones to floatstones, with tabular Stromatoporoids and solitary corals.
The matrix rock is variable from fine to coarser grained, with the better reservoir being related to the coarser matrix rock. These strata have increasing amounts of digitate Stromatoporoids (Stachyodes) in some areas, suggesting shallower depositional conditions in the western portion of the Properties.
The following phi-h maps show the distribution of pay in the Lower interval at Swan Hills. The depositional pattern in the Lower is dominated by biological processes.
Middle Swan Hills Platform Interval
Overlying the Lower is the Middle interval, which has rudstones and floatstones with bulbous Stromatoporoids and Amphipora comprising the majority of the allochems in the rock. Variations in the size of the matrix also tend to control reservoir quality in the Middle interval. This is interpreted to represent shallower water deposition than that of the Lower. The vast majority of these allochems are not in growth position and often are fractured indicating transport after initial deposition.
It is interpreted that these strata were laid down over broad areas, more commonly along the eastern side of the platform, becoming less common towards the platform interior. These strata were later modified into northeast to southwest oriented depositional packages due to storms, which would have predominately come from the northeast given the paleogeographic position of Swan Hills in the Middle Devonian.
The following phi-h maps show the distribution of pay in the Middle interval at Swan Hills.
Upper Swan Hills Platform Interval
Aspenleaf refers to the third Swan Hills Platform interval as the Upper. This interval is dominated by Amphipora floatstones to rudstones. Areas with the best reservoir development have coarser grained matrix and tend to have developed along northeast southwest orientations. Storm agitation winnowed out the finer grained matrix. The reservoir strata in this interval are well developed along the northeastern part of the platformal succession and decrease south and westward, then picking up again in the regions more proximal to where the Swan Hills reefs would ultimately develop. This is possibly because of decreased water depths in deposition.
The following phi-h maps show the distribution of pay in the Upper interval at Swan Hills.
Upper + Swan Hills Platform Interval
Overlying the Upper is an interval Aspenleaf refers to as the Upper +. This interval is like the Upper in that it is composed of Amphipora rich strata that were influenced by storms, but likely deposited in slightly shallower water. Coarser grained matrix is more common and at some point the strata was exposed to meteoric water that created secondary moldic pores and pinpoint vugs with enhanced permeability. Where present, these strata are the best reservoir in the Swan Hills platformal package.
The following phi-h maps show the distribution of pay in of the Upper + interval at Swan Hills.
Upper ++ Swan Hills Platform Interval
The youngest rocks to make up the Swan Hills platform are those of the Upper ++. These strata are limited in their distribution, occurring only near (and of course under) the Swan Hills reefs. Skeletal, bioclastic rudstones with calcarenitic matrix comprise these rocks and result in very good reservoir where present.
The following phi-h map shows the distribution of pay in the Upper ++ Swan Hills platform interval at Swan Hills. The Upper ++ interval is not present in Area 2 – Section 02-068-09W5.
Swan Hills Seismic
The Company does not have an interest in any seismic data relating to the Properties.
Swan Hills Marketing
The solution natural gas and non-associated natural gas from Aspenleaf’s wells at Swan Hills is transported via Canadian Natural Resources Limited, Crescent Point Energy Corp. or Conifer Energy Inc. transportation agreements and then processed at the Conifer Judy Creek Gas Plant at 15-25-64-11W5.
Further details relating to the marketing arrangements are available in the data room for parties that execute a confidentiality agreement.
Aspenleaf sells its oil and natural gas liquids via master sales agreements with major purchasers that encompass a larger geographical area. A purchaser must arrange its own marketing contracts as these agreements are not assignable.
Swan Hills Reserves
GLJ Ltd. (“GLJ”) prepared an independent reserves evaluation of the Properties (the “GLJ Report”). The GLJ Report is effective December 31, 2021 using GLJ’s January 1, 2022 forecast pricing.
GLJ estimated that, as of December 31, 2021, the Properties contained remaining proved plus probable reserves of 5.0 million barrels of oil and natural gas liquids and 1.2 Bcf of natural gas (5.2 million boe), with an estimated net present value of $46.6 million using forecast pricing at a 10% discount.
Swan Hills LMR
As of March 5, 2022, Aspenleaf’s net deemed asset value for the Properties was $4.3 million (deemed assets of $10.1 million and deemed liabilities of $5.8 million), with an LMR ratio of 1.75.
Swan Hills Well List
Click here to download the complete well list in Excel.
AREA 1 - SWAN HILLS MINORS
Township 64-67, Range 8-10 W5Average daily production net to Aspenleaf from Area 1 - Swan Hills Minors for the quarter ended December 31, 2021 was approximately 240 boe/d consisting of 229 barrels of oil and natural gas liquids per day and 70 Mcf/d of natural gas.
Operating income net to Aspenleaf for the quarter ended December 31, 2021 averaged approximately $155,000 per month, or approximately $1.9 million on an annualized basis.
Aspenleaf has identified 13 proven undeveloped and seven probable booked horizontal drilling locations on its lands as shown on the following map.
The Company estimates costs to drill, complete, equip and tie-in a one-mile well to be $3.6 million and $4.9 million for a two-mile horizontal well. The undeveloped location economics are robust at US$75.00/bbl WTI with before tax internal rates of return ranging from 20% to over 100%.
Morse River Unit No. 1 Waterflood Upside
The Morse River Unit No. 1 (100% working interest) has a low recovery factor compared to analogue waterflood projects on the Swan Hills trend. The Company believes there is potential to increase recovery through waterflooding the un-swept areas of the Unit. A simulation study was completed on the Unit to identify the un-swept areas.
Facilities
Aspenleaf has a 100% working interest in the following facilities at Area 1 - Swan Hills Minors.
Further details of the Company’s facilities and pipelines are available in the data room for parties that execute a confidentiality agreement.
Reserves
GLJ Ltd. (“GLJ”) prepared an independent reserves evaluation of the Properties (the “GLJ Report”). The GLJ Report is effective December 31, 2021 using GLJ’s January 1, 2022 forecast pricing.
GLJ estimated that, as of December 31, 2021, the Area 1 - Swan Hills Minors interests contained remaining proved plus probable reserves of 4.0 million barrels of oil and natural gas liquids and 1.1 Bcf of natural gas (4.2 million boe), with an estimated net present value of $34.2 million using forecast pricing at a 10% discount.
As of March 5, 2022, Aspenleaf’s net deemed asset value for Area 1 - Swan Hills Minors was $2.6 million (deemed assets of $8.3 million and deemed liabilities of $5.6 million), with an LMR ratio of 1.47.
AREA 2 - SECTION 02-068-09W5
Township 68, Range 9 W5Historical declines from Area 2 are approximately 10%. Annualized operating income net to Aspenleaf is approximately $540,000 based on an average of $45,000 per month for the quarter ended December 31, 2021.
Area 2 directly offsets production from Razor Energy Corp. which is currently under waterflood. The offsetting waterflood provides pressure support to the Swan Hills reservoir in Section 02-068-09W5.
Aspenleaf has identified three proven undeveloped booked horizontal drilling locations on its lands as shown on the adjacent map.
The Company estimates the cost to drill, complete, equip and tie-in a one-mile well to be $3.6 million. The undeveloped location economics are robust at US$75.00/bbl WTI with before tax internal rates of return in the range of 60% to 100%.
Facilities
The Company holds an interest in one single well battery at 02-02-068-09W5.
Further details of the Company’s facilities and pipelines are available in the data room for parties that execute a confidentiality agreement.
GLJ Ltd. (“GLJ”) prepared an independent reserves evaluation of the Properties (the “GLJ Report”). The GLJ Report is effective December 31, 2021 using GLJ’s January 1, 2022 forecast pricing.
GLJ estimated that, as of December 31, 2021, the Area 2 - Section 02-068-09W5 interests contained remaining proved plus probable reserves of 982,000 barrels of oil and natural gas liquids and 181 MMcf of natural gas (1.0 million boe), with an estimated net present value of $12.4 million using forecast pricing at a 10% discount.
LMR
As of March 5, 2022, Aspenleaf’s net deemed asset value for Area 2 was $1.7 million (deemed assets of $1.8 million and deemed liabilities of $151,043), with an LMR ratio of 12.01.
PROCESS & TIMELINE
Sayer Energy Advisors is accepting cash offers to acquire the Properties until 12:00 pm on Thursday May 12, 2022. Aspenleaf is entertaining separate offers for the two areas: Area 1 - Swan Hills Minors and Area 2 - Section 02-068-09W5.
transaction(s) with the party(ies) submitting the most acceptable proposal(s) at the conclusion of the process.
Sayer Energy Advisors is accepting cash offers from interested parties until
noon on Thursday May 12, 2022.
NOTE REGARDING A SAYER PROCESS
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.
CONFIDENTIALITY AGREEMENT
Parties
wishing to receive access to the confidential information with detailed
technical 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 GLJ 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 Grazina Palmer at 403.266.6133.