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Under Review   /   Chair Resources Inc.



Chair Resources Inc.

Property Divestiture
Bid Deadline: October 28, 2021 12:00 PM
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OVERVIEW

Chair Resources Inc. and Chair Holdings Limited (collectively “Chair” or the “Company”) has engaged Sayer Energy Advisors (“Sayer”) to assist it with the sale of all of the assets of the Company which are located throughout western Canada.
 
The Company’s oil and natural gas assets consist of long-life, low-decline, non-operated oil and natural gas working interests and royalty interests in the Verger, Lloydminster, Swan Hills, Nipisi, Hangingstone/Portage and Fontas areas of Alberta and Saskatchewan (the “Properties”).
 
The Company share of production from the Properties was approximately 262 barrels of oil equivalent per day (1.5 MMcf/d of natural gas and 14 barrels of oil and natural gas liquids per day) in the first six months of 2021.
 
Details on the Company’s facilities and infrastructure is available in the data room for parties that execute a confidentiality agreement.

 

Overview Map Showing the Location of Chair's Divestiture Properties


Production Overview

The Company share of production from the Properties was approximately 262 barrels of oil equivalent per day (1.5 MMcf/d of natural gas and 14 barrels of oil and natural gas liquids per day) in the first six months of 2021.
 


Reserves Overview

Trimble Engineering Associates Ltd. (“Trimble”) prepared an independent reserves evaluation of Chair’s properties as part of the Company’s year-end reporting (the “Trimble Report”). The Trimble Report is effective December 31, 2019, using Trimble’s January 1, 2020 forecast pricing. The Trimble Report was updated for the Swan Hills and Verger properties (the “Updated Report”). The Updated Report is effective August 31, 2021, using Trimble’s July 1, 2021 forecast pricing.
 
Trimble estimates that as of December 31, 2019 and August 31, 2021, the Properties contained remaining proved plus probable reserves of 45,000 barrels of oil and natural gas liquids and 4.0 Bcf of natural gas (710,000 boe), with an estimated net present value of approximately $959,000 using forecast pricing at a 10% discount.

 


LMR Summary

Chair does not operate any wells or facilities.

Seismic


Chair has differing quantities and ownership in 2D and 3D seismic data over portions of several Properties including Hangingstone/Portage, Lloydminster, Nipisi, and Swan Hills.

Information on the seismic ownership will be made available in the data room to parties that execute a confidentiality agreement.

VERGER

Township 22-27, Range 11-15 W4

At Verger, the Company holds various non-operated working interests in certain lands.
 
The Company share of production from Verger in the first six months of 2021 was approximately 186 boe/d (1.1 MMcf/d of natural gas and two barrels of oil per day).
 
Chair’s net operating income from Verger in the first six months of 2021 was approximately $24,000 per month, or $288,000 on an annualized basis.
 
The current strength in AECO forward natural gas prices will have a significant positive effect on the net operating income at Verger.
 
Chair’s forecast of net operating income for the remainder of 2021 and for calendar 2022 is as follows:

 


 


Verger, Alberta
Gross Production Group Plot of Chair's Oil & Natural Gas Wells


Verger Facilities
 
The Company holds a 28.79% working interest in the Verger gas plant located at 08-26-022-13W4 which is operated by Canadian Natural Resources Limited.
 
Chair also holds a 12.5% working interest in the Verger/Cessford compressor plant located at 06-07-022-12W4 which is operated by Canadian Natural Resources Limited.
 
Verger Marketing
 
The Company sells its natural gas through BP Canada Energy Resources Company through a short-term agreement.
 
Verger Reserves
 
Trimble Engineering Associates Ltd. (“Trimble”) prepared an independent reserves evaluation of certain of Chair’s properties (the “Updated Report”). The Updated Report is effective August 31, 2021, using Trimble’s July 1, 2021 forecast pricing.
 
Trimble estimates that as of August 31, 2021 the Verger property contained remaining proved plus probable reserves of 13,000 barrels of oil and 3.4 Bcf of natural gas (576,000 boe), with an estimated net present value of approximately $161,000 using forecast pricing at a 10% discount.

 


Verger Well List

Click here to download the complete well list in Excel.

HANGINGSTONE/ PORTAGE

Township 71-85, Range 9-18 W4

In the Hangingstone/Portage area, Chair holds various working interests in certain lands, as well as a 49.14918% working interest in the Portage Gas Unit operated by IPC Canada Ltd.

 
The Company share of production from Hangingstone/Portage in the first six months of 2021 was approximately 62 boe/d (370 Mcf/d of natural gas).

 



Portage Gas Unit


Hangingstone/Portage, Alberta
Gross Production Group Plot of Chair's Oil & Natural Gas Wells

Hangingstone/Portage Facilities
 
At Hangingstone/Portage, the Company holds a 20% working interest in the battery and compressor at 02-05-082-11W4 and compressors at 11-34-083-11W4 and 14-09-082-12W4 operated by Connacher Oil and Gas Limited.
 
Chair also holds an 83.4% working interest in a compressor located at 08-01-078-17W4 which is operated by IPC Canada Ltd.
 
Hangingstone/Portage Marketing
 
There are no marketing arrangements in place specifically for the Hangingstone/Portage property.
 
Hangingstone/Portage Reserves
 
Trimble Engineering Associates Ltd. (“Trimble”) prepared an independent reserves evaluation of Chair’s properties as part of the Company’s year-end reporting (the “Trimble Report”). The Trimble Report is effective December 31, 2019, using Trimble’s January 1, 2020 forecast pricing.
 
Trimble estimates that as of December 31, 2019 the Hangingstone/Portage property contained remaining proved plus probable reserves of 584 MMcf of natural gas (97,000 boe), with an estimated net present value of approximately $336,000 using forecast pricing at a 10% discount.

 


Hangingstone/Portage Well List

Click here to download the complete well list in Excel.

NIPISI

Township 78-81, Range 7-9 W5

At Nipisi, Chair holds a 1.403129% working interest in the Nipisi Gilwood Unit No. 1 operated by Canadian Natural Resources Limited.

The Company share of production from Nipisi in the first six months of 2021 was approximately 12 boe/d (11 barrels of oil and natural gas liquids per day and five Mcf/d of natural gas).
 



Nipisi Gilwood Unit No. 1


Nipisi, Alberta
Gross Production Group Plot of Chair's Oil & Natural Gas Wells


Nipisi Facilities
 
The Company holds a 1.4031290% working interest in the Nipisi gas processing facilities which are operated by Canadian Natural Resources Limited.
 
Nipisi Marketing
 
Chair is paid by JIB by the operator for the natural gas volumes. Chair has a crude oil purchase agreement with Trafigura Canada General Partnership.
 
Nipisi Reserves
 
Trimble Engineering Associates Ltd. (“Trimble”) prepared an independent reserves evaluation of Chair’s properties as part of the Company’s year-end reporting (the “Trimble Report”). The Trimble Report is effective December 31, 2019, using Trimble’s January 1, 2020 forecast pricing.
 
Trimble estimates that as of December 31, 2019 the Nipisi Gilwood Unit No. 1 contained remaining proved plus probable reserves of 32,000 barrels of oil and natural gas liquids and 26 MMcf of natural gas (36,000 boe), with an estimated net present value of approximately $434,000 using forecast pricing at a 10% discount.

 


Nipisi Well List

Click here to download the complete well list in Excel.

LLOYDMINSTER

Township 34-55, Range 21 W3 - 13 W4

At Lloydminster, the Company holds various non-operated working interests in certain lands.

The Company share of production from Lloydminster in the first six months of 2021 was approximately nine Mcf/d of natural gas (two boe/d).




Lloydminster, Saskatchewan/Alberta
Gross Production Group Plot of Chair's Oil & Natural Gas Wells


Additional Wells Included in Lloydminster Property
 
There are several additional non-operated wells in Saskatchewan, specifically Township 3-7, Range 31 W1-15W2 which are included in the Lloydminster property as shown on the following map.

 


Lloydminster Facilities
 
The Company does not have an interest in any facilities at Lloydminster.
 
Lloydminster Marketing
 
There are no marketing arrangements in place specifically for the Lloydminster property.
 
Lloydminster Well List

Click here to download the complete well list in Excel.

SWAN HILLS

Township 63-69, Range 7-21 W5

At Swan Hills, Chair holds various working interest and royalty interests in certain lands.

The Company share of production from Swan Hills in the first six months of 2021 was minor volumes of oil per day.

Chair’s net operating income from Swan Hills in the first six months of 2021 was approximately $50 per month, or $600 on an annualized basis.

 


Swan HillsAlberta
Gross Production Group Plot of Chair's Oil & Natural Gas Wells


Swan Hills Facilities
 
The Company does not have an interest in any facilities at Swan Hills.
 
Swan Hills Marketing
 
There are no marketing arrangements in place specifically for the Swan Hills property.
 
Swan Hills Reserves
 
Trimble Engineering Associates Ltd. (“Trimble”) prepared an independent reserves evaluation of certain of Chair’s properties (the “Updated Report”). The Updated Report is effective August 31, 2021, using Trimble’s July 1, 2021 forecast pricing.
 
Trimble estimates that as of August 31, 2021 the Swan Hills property contained remaining proved plus probable reserves of 500 barrels of oil, with an estimated net present value of approximately $28,000 using forecast pricing at a 10% discount.

 


Swan Hills Well List

Click here to download the complete well list in Excel.

FONTAS

Township 101-106, Range 8-12 W6

In the Fontas area, Chair holds various working interests in certain lands. There is currently no production from the Fontas property.
 


Fontas Facilities
 
The Company holds a 15% working interest in the Fontas gas plant located at 02-28-102-11W6 which is operated by NuVista Energy Ltd.
 
Fontas Marketing
 
There are no marketing arrangements in place specifically for the Fontas property.
 
Fontas Reserves
 
The Fontas property was not evaluated as part of the Company’s year-end reporting.
 
Fontas 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 until 12:00 pm on Thursday October 28, 2021.
 
 
Sayer Energy Advisors does not conduct a "second-round" bidding process; the intention is to attempt to conclude
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 October 28, 2021.

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

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