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Under Review   /   Athabasca Oil Corporation



Athabasca Oil Corporation

Joint Venture Opportunity
Bid Deadline: October 27, 2022
12:00 PM
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OVERVIEW

Sayer Energy Advisors has been engaged to assist Athabasca Oil Corporation (“Athabasca” or the “Company”) with the farmout or sale of its oil and natural gas interests located in the Karr area of Alberta (the “Property”).
 
The Property consists of a 100% working interest in approximately 51,000 acres of land which was acquired by Athabasca as four-year Crown mineral rights licenses. 
 
There is no production from the Property. The Property is prospective for oil and natural gas drilling in the Montney Formation.
 
Further details on the licenses are available in the virtual data room for parties that execute a confidentiality agreement.
 

Overview Map Showing Location of the Property

KARR

Township 64-67, Range 25 W5 - 2W6

At Karr, Athabasca holds a 100% working interest in approximately 51,000 acres of land which was acquired by Athabasca as four-year Crown mineral rights licenses.  These lands were acquired because of their position within the up-dip oil prone leg of the Montney Formation within the Deep Basin.
 


 

The Company has estimated the cost to drill and complete a Montney horizontal well at Karr to be $7.5 million as highlighted below. In addition, the following table outlines all other potential costs.


Montney Geology

Recent Montney development at Karr has been very active. Several operators in the region have been developing the reservoir, with over 410 wells drilled in the Montney since 2018.  The Company’s lands at Karr lie between the low-pressure Deep Basin oil deposits to the north and east at Ante Creek and the high-pressure Deep Basin natural gas liquids trend to the south and west at Kakwa. The Company commissioned a comprehensive hydrodynamic study completed by Enlighten Geoscience Ltd. which is available to parties that execute a confidentiality agreement.
 
Offsetting operators have been targeting primarily the Lower Middle Montney and the Upper Middle Montney.  Athabasca’s acreage is most prospective in the Lower Middle Montney displaying comparable reservoir quality (cross section A-A’) to that observed in the Lower Middle Montney successfully targeted by Spartan Delta Corp. at Gold Creek and Karr.
 
The Lower Montney and Upper Middle Montney are also seen as prospective.
 
The following map shows the recent Montney development drilling offsetting the Company’s lands in the Karr area, with 365-day initial production type curve values posted for the comparable Spartan Delta Gold Creek and Karr properties of 643 boe/d (66% liquids) and 619 boe/d (85% liquids) respectively, as stated in Spartan Delta’s investor presentation dated September 2, 2022.
 

Montney Regional Drilling Map


The following cross-section shows the Montney reservoir at Gold Creek compared to Athabasca’s lands at Karr.
 

Gold Creek to Karr Regional Montney Cross Section

 

For net pay mapping, Athabasca utilized a 3% porosity and a 50% water saturation cut-off to determine that the net pay of the target interval is in the order of 20 metres.  The map below shows oil in place for the Lower Middle Montney with a maximum of 10 million barrels per section.  The Company has mapped approximately 585 million barrels of oil originally in place in the Lower Middle Montney interval at Karr. 
 
At Karr, the Company has identified approximately 100 1.5-mile lateral drilling locations in the Montney Formation using 400 metre well spacing. 
 
Athabasca has surveyed and is in the process of acquiring a surface location at 16-11-065-27W5 (denoted by a red star on the following map), which can be utilized for a stratigraphic or lateral well.  This location is also controlled by regional trade 2D seismic line(s).

Lower Middle Montney Original Oil in Place Map

The Company anticipates a 365-day initial production rate of approximately 580 boe/d (48% liquids). Estimated ultimate recovery for a Montney well at Karr is approximately 240,000 barrels of oil and 2.3 Bcf of natural gas. The economics of the 1.5-mile horizontal wells indicate a net present value at a 10% discount of approximately $10.6 million using a flat oil price of $85.00 WTI and a flat natural gas price of $4.00 AECO.
 
The following graph shows the expected type curve of a Montney well at Karr.
 


In addition to the Montney Formation, the Company also believes the Cardium, Dunvegan, Duvernay and Beaverhill Lake formations to be prospective for oil and natural gas at Karr. Additional mapping, petrophysical interpretations and a management presentation will be made available to parties that execute a confidentiality agreement.

Karr Seismic

Athabasca has ownership in seven 2D lines of seismic data at Karr.

Karr Reserves

Athabasca does not have a third-party reserve report of the Property.

Karr Wells

At Karr, Athabasca holds a 100% working interest in the stratigraphic test well 102/09-25-065-27W5/00 and the horizontal well 100/09-35-065-27W5/02.  There is no production from these wells.

PROCESS & TIMELINE

Sayer Energy Advisors is accepting proposals relating to the process until 12:00 pm on Thursday October 27, 2022.


 
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 proposals from interested parties until
noon on Thursday October 27, 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 (brye@sayeradvisors.com) or fax (403.266.4467).

Included in the confidential information is the following: summary land information, geological mapping and other relevant technical information.

Download Confidentiality Agreement

To receive further information on the Property please contact Ben Rye, Tom Pavic or Grazina Palmer at 403.266.6133.

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