Close
Save

Offering Details

Back

Under Review   /   Vermilion Energy Inc.



Vermilion Energy Inc.

Property Divestiture
Bid Deadline: November 23, 2023
12:00 PM
Download Full PDF - Printable


OVERVIEW

Vermilion Energy Inc. (“Vermilion” or the “Company”) has engaged Sayer Energy Advisors to assist it with the sale of its working interests located in the Alexander area of Alberta (the “Property”).
 
At Alexander, Vermilion holds primarily operated working interests in approximately 17.25 sections of land. Production from the Alexander property is primarily from the Wabamun, Detrital and Alexander formations. Additional targets include the Mannville Group.
 
Average daily sales production net to Vermilion from Alexander for the first quarter of 2023 was approximately 149 boe/d, consisting of 110 bbl/d of oil and natural gas liquids and 231 Mcf/d of natural gas.
 
Operating income net to Vermilion from Alexander for the first quarter of 2023 was approximately $127,500 per month, or $1.5 million on an annualized basis.
 
Overview Map Showing the Location of the Divestiture Property

 

ALEXANDER

Township 55-57, Range 24-27 W4

At Alexander, Vermilion holds primarily operated working interests in approximately 17.25 sections of land.
 
Production from the Alexander property is primarily from the Wabamun, Detrital and Alexander formations. Additional targets include the Mannville Group.
 
Average daily sales production net to Vermilion from Alexander for the first quarter of 2023 was approximately 149 boe/d, consisting of 110 bbl/d of oil and natural gas liquids and 231 Mcf/d of natural gas.
 
Operating income net to Vermilion from Alexander for the first quarter of 2023 was approximately $127,500 per month, or $1.5 million on an annualized basis.
 


Alexander, Alberta
Gross Production Group Plot of Vermilion’s Oil & Natural Gas Wells

 
Alexander Upside

At Alexander, Vermilion has identified additional development targets in the Mannville Group which include recompletions and up to 20 potential new horizontal drilling locations.

The Detrital and Basal Quartz are the lowermost target zones of the Ellerslie Member which are prospective for oil and natural gas. The Alexander Sands, or Alex, of the uppermost zone is also prospective for oil and natural gas.

The Alex sandstone is found at a depth of approximately 1,150 metres and was deposited in a marginal marine setting. The sand consists of approximately 2-6 metres of pay with an underlying water contact. The Alex is the uppermost Cretaceous sand of the Ellerslie Member. The Alex is a fine-grained, moderately to well-sorted silica cemented quartzose with high intergranular porosity.

The play is defined by a stratigraphic trap with an oil/water contact at approximately 466 metres and a gas cap at 457 metres. Porosity ranges from 12-18% and permeability of up to 100 mD.
 


Vermilion has also identified an opportunity to develop conventional natural gas in the Notikewin Formation as shown in the following type log.
 

Long Run Alexander 100/04-08-56-26W4/0
Notikewin Formation Type Log


The Notikewin is a sandstone-rich channel system with up to 15% porosity. The Notikewin development in the area to date has been predominantly vertical. There have been two wells completed in the Notikewin reservoir with small perforation jobs.

 
The 100/04-08-056-26W4/0 well has produced over two Bcf of cumulative natural gas and the 100/15-18-056-26W4/0 well has produced approximately 400 MMcf of cumulative natural gas.
 
As shown on the following plat, Baytex Energy Corp. drilled the horizontal multi-leg well BAYTEX HZ MORINV 00/08-25-056-25W4/05 just offsetting Vermilion’s land at Alexander in November 2022. The well was drilled to a true vertical depth of approximately 1,000 metres and came on production in February 2023. The well has produced approximately 28,000 barrels (130 bbl/d) of oil as of August 31, 2023.
 


 

Alexander Seismic

In the Alexander area, Vermilion has an interest in various 2D and 3D seismic data. More details relating to the seismic will be available in the virtual data room for parties that execute a confidentiality agreement.

Alexander Marketing

Oil production from Alexander is trucked to Secure Energy Services Inc.’s Buck Creek/Drayton Valley facilities. Volumes are set up as a buy/sell where Secure returns the volumes to Vermilion at Edmonton.

Natural gas from Alexander goes through the ATCO-connected Sturgeon APN meter and included in TC Energy Corporation’s NGTL system. Natural gas from Alexander is sold at AECO daily or monthly price.

Alexander Facilities

At Alexander, Vermilion owns and operates the Spartan Alexander Gas Plant and natural gas gathering system located at 03-07-056-26W4, natural gas gathering system at 03/08-01-056-27W4, an injection plant located at 08-01-056-27W4, and a compressor station located at 05-31-055-26W4 as well as several single and multi-well batteries. Further details on the Company’s facilities are available in the virtual data room for parties that execute a confidentiality agreement.

Alexander Reserves

GLJ Ltd. (“GLJ”) prepared an independent reserves evaluation of the Property as part of the Company’s year-end reporting (the “GLJ Report”). The GLJ Report is effective December 31, 2022 using an average of GLJ, McDaniel & Associates Consultants Ltd. and Sproule Associates Limited’s January 1, 2023 forecast pricing (“3C Average”).

GLJ estimated that, as of December 31, 2022, the Alexander property contained remaining proved plus probable reserves of 812,000 barrels of oil and natural gas liquids and 1.1 Bcf of natural gas (993,000 boe), with an estimated net present value of $17.8 million using forecast pricing at a 10% discount.
 



Alexander LMR

As of October 7, 2023, the Alexander property had a deemed net asset value of ($2.1 million) (deemed assets of $5.7 million and deemed liabilities of $7.8 million), with an LMR ratio of 0.73.
 


 

Alexander 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 November 23, 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.

Sayer Energy Advisors is accepting cash offers from interested parties until
noon on Thursday November 23, 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.

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 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 Sydney Birkett at 403.266.6133.
 
Top