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Under Review   /   Aldon Oils Ltd.



Aldon Oils Ltd.

Property Divestiture
Bid Deadline: June 2, 2022
12:00 PM
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OVERVIEW

Aldon Oils Ltd. (“Aldon” or the “Company”) has engaged Sayer Energy Advisors to assist it with the sale of certain non-core oil and associated natural gas interests located in the Bemersyde, Huntoon, Midale, Midale North and Weyburn areas of southeastern Saskatchewan (the “Properties”). The Properties consist of primarily low-decline, light oil production.
 
Average daily production net to Aldon from the Properties for the month of January 2022 was approximately 189 bbl/d of oil.
 
Operating income net to Aldon from the Properties in January 2022 was approximately $212,000, or $2.5 million on an annualized basis.

Overview Map Showing the Location of the Divestiture Properties

Production Overview

Average daily production net to Aldon from the Properties for the month of January 2022 was approximately 189 bbl/d of oil as outlined below.

Operating income net to Aldon from the Properties in January 2022 was approximately $212,000, or $2.5 million on an annualized basis.

 
Gross Production Group Plot of Aldon’s Oil Wells

LMR Summary

As of April 28, 2022, Aldon’s net deemed asset value for the Properties was ($287,279) (deemed assets of $4.1 million and deemed liabilities of $4.4 million), with an LMR ratio of 0.93.
 
The LMR for each of the Properties as of April 28, 2022 is summarized below.

 
Summary of LMR by Property

Marketing Overview

Oil is sold on a 30-day evergreen contract to either Tidal Energy Marketing Inc. or Kingston Midstream.

Reserves Overview


The Company does not have a third-party reserves evaluation of the Properties.

 

HUNTOON

Township 6-7, Range 10-11 W2

At Huntoon, Aldon holds mainly a 100% working interest in a total of approximately three sections of land. The Huntoon property is located just north of the Midale oil pool and includes 26 active wells producing oil at a low decline rate from the Midale, Frobisher and Bakken formations. Aldon has one Frobisher disposal well at 191/12-05-007-10W2/0.
 
The Huntoon property has stacked upside in several formations, with up to twenty additional Midale locations, five Frobisher locations and seven Bakken locations. Nearby wells have also produced from the Birdbear, Duperow and Red River formations.
 
Average daily production net to Aldon from Huntoon for the month of January 2022 was approximately 97 barrels of oil per day.
 
Operating income net to Aldon from Huntoon in January 2022 was approximately $86,000, or $1.0 million on an annualized basis.

 
 
Huntoon, Saskatchewan – Gross Production Group Plot of
Aldon’s Oil Wells

Huntoon Geology
 
Midale Formation
 
The Huntoon area lies immediately updip from the Midale oil pool and subjacent to the Midale subcrop. Midale wells on the Huntoon property are characterized by low-inflow, low-water cut, long-term production. It is believed that up to 20 development drilling locations exist at Huntoon as shown in blue on the following map.

 

The low permeability of the rock means that primary production alone has been unable to efficiently drain the reservoir, and therefore other methods are necessary to access the reserves. Implementing a waterflood may be the most cost-efficient means of increasing production, and if successful the results may warrant the drilling of additional horizontal wells where pioneer vertical wells were uneconomic.
 
Alternatively, various companies have been stimulating the Midale with fracture treatments in areas of southeast Saskatchewan where those beds are characterized by good reserves but low permeability. The Pinto, Alameda and Steelman areas in southeastern Saskatchewan are examples where a similar reservoir to Huntoon exists, and fracture treatments there have successfully unlocked additional value over primary production.

The following well log shows the Midale Marly and Midale Vuggy reservoir at Huntoon.

Aldon Midale 111/10-05-007-10W2/03 – Midale Type Log

Additional Upside
 
The Company has identified additional development locations in the Frobisher and Bakken formations where previous drilling has not fully delineated the boundaries of those plays. Two development locations exist in the Frobisher on the north half of Section 05-007-10W2, one development location exists on LSDs 15 and 16 of Section 31-006-10W2 and two locations exist on the northeast quarter of Section 34-006-11W2 and the northwest quarter of Section 35-006-11W2.
 
Crescent Point Energy Corp. penetrated the Frobisher on the northeast quarter of Section 07-007-10W2 with the 102/15-18-007-10W2 wellbore which resulted in a gas spike of 11% from the Stoughton beds and may indicate an additional location there as shown on the following map.
 
The map below shows the existing Frobisher-target wells in green, with structure contours of the top of the Frobisher Evaporite indicated in light grey with 5 metre contour intervals. The five prospective Frobisher locations are shown in blue.

 

Hydrocarbon shows and production from older vertical wellbores and a structural nose that trends from the northeast to southwest have generated further interest in the Frobisher to the west in the south half of Section 16-007-11W2.
 
The abundant, concentrated nature of the hydrocarbon shows in the State ‘A’, Halbrite and Huntoon beds, combined with favourable structure, suggests the possibility of an extension of the pool. Developing this area with horizontal wells could be key in order to maximize oil production.

 

The preceding map shows the distribution of production around Section 16-007-11W2. Frobisher hydrocarbon shows are highlighted with red stars. The structure contours of the top of the Frobisher Evaporite are indicated in grey with contour intervals at 5 metres.

The following well log shows the DST over the Halbrite target recovered 181 metres of gassy oil and 38 metres of mud-cut, gassy oil. Significant hydrocarbon shows occur in the Halbrite, Huntoon and State ‘A’ beds in the wells surrounding the Huntoon property.

 
Aldon Midale 101/03-16-007-11W2/00 – Frobisher Type Log

 
As one of southeast Saskatchewan’s primary plays, there are very good producers from the Bakken Formation offsetting the Company’s lands at Huntoon. Many of the offsetting wells are existing Bakken producing wells.
 
Aldon has identified up to seven Bakken development locations on the property. The following map shows the Company’s seven prospective Bakken locations in blue.

 

The Company has identified three locations for re-entry potential of existing wellbores. The wells were initially drilled with an open hole completion and can be further developed using multi-stage fracture stimulation.
 
The upside locations are surrounded by successfully fracture stimulated Bakken wells by Crescent Point Energy Corp. and Ridgeback Resources Inc. Similar post fracture results could be expected. 
 
The following map shows the Aldon Bakken frac candidates in green, Crescent Point wells in red and Ridgeback wells in blue.

 

Huntoon Seismic
 
The Company has trade 2D and 3D seismic over a portion of its lands at Huntoon, as illustrated on the following plat. The Company’s interpretations of the seismic are available in hard copy for viewing in the Data Room, located in Sayer’s office, by parties which have executed a confidentiality agreement.

 


Huntoon Facilities
 
Details of the facilities and equipment at Huntoon are as follows:

 

Huntoon Reserves
 
The Company does not have a third-party reserves evaluation of the Properties.
 
Huntoon LMR
 
As of April 28, 2022, Aldon’s net deemed asset value for Huntoon was ($279,829) (deemed assets of $2.2 million and deemed liabilities of $2.4 million), with an LMR ratio of 0.89.

 

Huntoon Well List
 
Click here to download the complete well list in Excel.



 

MIDALE

Township 5, Range 12 W2

At Midale, Aldon holds operated, largely a 100% working interest in over three sections of land on which there are several wells with low-decline, light oil production primarily from the stacked Midale Marly, Midale Vuggy and Frobisher beds. Productivity from the zones is dependent on structure and stratigraphy. The Company also has one Mannville and one Midale disposal well at Midale.
 
Average daily production net to Aldon from Midale for the month of January 2022 was approximately 45 barrels of oil per day.
 
Operating income net to Aldon from Midale in January 2022 was approximately $75,000, or $900,000 on an annualized basis.

 
 
Midale, Saskatchewan – Gross Production Group Plot of
Aldon’s Oil Wells

Midale Seismic
 
The Company has trade 2D and 3D seismic over a portion of its lands at Midale, as illustrated on the following plat. The Company’s interpretations of the seismic are available in hard copy for viewing in the Data Room located in Sayer’s office, by parties which have executed a confidentiality agreement.

 


Midale Facilities
 
Details of the facilities and equipment at Midale are as follows:


Midale Reserves
 
The Company does not have a third-party reserves evaluation of the Properties.
 
Midale LMR
 
As of April 28, 2022, Aldon’s net deemed asset value for Midale was $99,405 (deemed assets of $834,515 and deemed liabilities of $735,110), with an LMR ratio of 1.14.


Midale Well List
 
Click here to download the complete well list in Excel.



 

MIDALE NORTH

Township 5-6, Range 10-11 W2

At Midale North, Aldon holds a 100% working interest in a total of one section of land. The Midale North property is located just outside of the Midale Unit which is operated by Cardinal Energy Ltd. The primary reservoir is the Midale Marly beds, with good porosity and lower permeability. Reservoir pressure is maintained by Cardinal’s CO2 flood within the Unit, resulting in low declines for the local area.
 
Average daily production net to Aldon from Midale North for the month of January 2022 was approximately 23 barrels of oil per day.
 
Operating income net to Aldon from Midale North in January 2022 was approximately $34,000, or $408,000 on an annualized basis.

 
 
Midale North, Saskatchewan – Gross Production Group Plot of
Aldon’s Oil Wells

Midale North Geology
 
The following map shows the structure contours on the top of the Midale beds at 5 metre contour intervals with Aldon’s upside locations at Midale North shown in blue.


Midale North Seismic
 
The Company does not have ownership in any seismic data over its lands at Midale North.
 
Midale North Facilities
 
The Company does not have an interest in any facilities at Midale North.
 
Midale North Reserves
 
The Company does not have a third-party reserves evaluation of the Properties.
 
Midale North LMR
 
As of April 28, 2022, Aldon’s net deemed asset value for Midale North was $282,620 (deemed assets of $496,620 and deemed liabilities of $214,000), with an LMR ratio of 2.32.

 

Midale North Well List
 
Click here to download the complete well list in Excel.


 

WEYBURN

Township 6, Range 13 W2

At Weyburn, Aldon holds mainly a 100% working interest in over one section of land located immediately adjacent to the northeastern edge of the Weyburn Unit which is currently under CO2 flood. Oil production is from the Midale Marly and Vuggy beds. Productivity is dependent on reservoir development and structure. The Company also has a Midale disposal well at 102/10-26-006-13W2/0.
 
Average daily production net to Aldon from Weyburn for the month of January 2022 was approximately 17 barrels of oil per day.
 
Operating income net to Aldon from Weyburn in January 2022 was approximately $13,000, or $156,000 on an annualized basis.
 
Further drilling opportunities exist at Weyburn where horizontal wells can be placed to maximize exposure to both reservoirs, particularly with multiple legs. The Company has identified a strong, northeast to southwest-trending structural nose on the lands.

 
 
Weyburn, Saskatchewan – Gross Production Group Plot of
Aldon’s Oil Wells

Weyburn Seismic
 
The Company has trade 2D seismic over a portion of its lands at Weyburn, as illustrated on the following plat. The Company’s interpretations of the seismic are available in hard copy for viewing in the Data Room located in Sayer’s office, by parties which have executed a confidentiality agreement.

 


Weyburn Facilities
 
Details of the facilities and equipment at Weyburn are as follows:

 

Weyburn Reserves
 
The Company does not have a third-party reserves evaluation of the Properties.
 
Weyburn LMR
 
As of April 28, 2022, Aldon’s net deemed asset value for Weyburn was ($23,157) (deemed assets of $486,988 and deemed liabilities of $510,145), with an LMR ratio of 0.95.

 

Weyburn Well List
 
Click here to download the complete well list in Excel.


 

BEMERSYDE

Township 12-13, Range 8 W2

At Bemersyde, Aldon holds primarily a 50% working interest in certain lands as well as a 50% interest in the Fee Title in the west half of Section 34-012-08W2, on which Aldon will grant a PNG lease. Oil production is from the Bakken, and Yeoman formations.  The Company also has a Mannville disposal well at Bemersyde.
 
Average daily production net to Aldon from Bemersyde for the month of January 2022 was approximately six barrels of oil per day.
 
Operating income net to Aldon from Bemersyde in January 2022 was approximately $4,000, or $48,000 on an annualized basis.

 
 
Bemersyde, Saskatchewan – Gross Production Group Plot of
Aldon’s Oil Wells

Bemersyde Seismic
 
The Company does not have ownership in any seismic data over its lands at Bemersyde.
 
Bemersyde Facilities
 
Details of the facilities and equipment at Bemersyde are as follows:

 

Bemersyde Reserves
 
The Company does not have a third-party reserves evaluation of the Properties.
  
Bemersyde LMR
 
As of April 28, 2022, Aldon’s net deemed asset value for Bemersyde was ($366,318) (deemed assets of $93,960 and deemed liabilities of $460,278), with an LMR ratio of 0.20.

 

Bemersyde Well List
 
Click here to download the complete well list in Excel.



 

PROCESS & TIMELINE

Sayer Energy Advisors is accepting cash offers to acquire the Properties unil 12:00 pm on Thursday, June 2, 2022.
 
 
Sayer Energy Advisors does not conduct a "second-round" bidding process; the intention is to attempt to conclude
a 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 June 2, 2022.

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.


 

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, LMR information, most recent net operations summary, and other relevant technical information.
 
Download Confidentiality Agreement
 
To receive further information on the Properties please contact Tom Pavic or Grazina Palmer at 403.266.6133.
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