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Under Review   /   Enercapita Energy Ltd.



Enercapita Energy Ltd.

Property Divestiture
Bid Deadline: December 10, 2020 12:00 PM
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OVERVIEW

Enercapita Energy Ltd. (“Enercapita” or the “Company”) has engaged Sayer Energy Advisors to assist with the sale of certain oil and natural gas assets located in the Vegreville area, specifically the  Bruce, Viking and Willingdon areas of central Alberta (the “Properties”).  The Properties consist of both operated and non-operated interests.  The Company’s intent is to divest all of its interests in the Properties.
 
Average daily production net to Enercapita from the Properties in October 2020 was approximately 1.4 MMcf/d of natural gas and six barrels of oil and natural gas liquids per day (238 boe/d).

 

Overview Map Showing the Location of the Divestiture Properties

Production Overview
 
Average daily production net to Enercapita from the Properties in October 2020 was approximately 1.4 MMcf/d of natural gas and six barrels of oil and natural gas liquids per day (238 boe/d).

 


Vegreville, Alberta
Gross Production Group Plot of Enercapita's Natural Gas Wells


Map Showing the Location of Enercapita's Vegreville, Alberta Wells


Reserves Overview
 
Sproule Associates Limited (“Sproule”) prepared an independent reserves evaluation of Enercapita’s properties as part of the Company’s year-end reporting (the “Sproule Report”).  The Sproule Report is effective December 31, 2019, using Sproule’s December 31, 2019 forecast pricing. 
 
Sproule estimated that as of December 31, 2019 the Properties contained remaining proved plus probable reserves of 1.4 Bcf of natural gas and 39,000 barrels of oil and natural gas liquids (268,000 boe), with an estimated net present value of approximately $1.1 million using forecast pricing at a 10% discount.

 



Seismic Overview
 
Enercapita does not have ownership in any seismic data over its lands at Vegreville.
 
LMR as of October 3, 2020
 
As of October 3, 2020, Enercapita’s net deemed asset value for the Properties was ($3.2 million) (deemed assets of $4,723,518 and deemed liabilities of $7,888,502), with an LMR ratio of 0.60.

 


 

Enercapita has received Site Rehabilitation Program funding from the government of Alberta of approximately $225,000 which is being applied to the Properties.  Detailed LMR information can be found in the confidential virtual data room by parties that execute a confidentiality agreement.
 
Vegreville Well List


Click here to download the complete well list in Excel.

VEGREVILLE PROPERTY

Township 47-51, Range 12-15 W4

At Viking, the Company holds various working interests in a shallow natural gas property including an 84.828421% working interest in the West Viking Gas Unit No. 1, which is operated by Enercapita, and a 8.006% working interest in the Holden Viking Gas Unit No. 3 operated by AlphaBow Energy Ltd.

Average production net to Enercapita from the Viking property for October 2020 was approximately 1.3 MMcf/d of natural gas (219 boe/d).

 


West Viking Gas Unit No. 1


Holden Viking Gas Unit No. 3


Production Upside
 
In the fourth quarter of 2020, the Company expects to easily add over 200 Mcf/d of natural gas production at Viking through restarting four wells with total capital expenditures of approximately $42,000.  The operations include stimulation and replacing coil tubing in the 100/13-16-048-13W4 well, recompleting and installing coil tubing in the 100/14-28-047-13W4/0 well, repairing tubing and changing the bottom hole pump in the 100/16-22-047-13W4/2 well and by changing the bottom hole pump in the 100/16-32-047-13W4/3 well.
 
The following chart shows the production type curves for the all of the producing wells in the Viking area with perforations.

 

Drilling Upside
 
Enercapita has identified a number of drilling locations and re-entry opportunities for uphole, bypassed pay, as show on the map that follows.

 


Non-Unit Upside


Within the West Viking Gas Unit No. 1 and the Holden Viking Gas Unit No. 3, Enercapita has identified a number of drilling locations and re-entry opportunities for uphole, bypassed pay, as listed below.
 

West Viking Gas Unit No. 1 Upside


Holden Viking Gas Unit No. 3 Upside


Mannville Group
 
Enercapita has identified two drilling locations targeting the Sparky Formation at Viking.  The following maps show the Sparky channel with the two locations at 07-28-047-013W4 and 04-32-047-13W4.

 


 


 


The Company has identified a drilling location targeting oil in the Lower Mannville at 16-22-53-13W4 as shown on the following map. 
 
Spur Petroleum Ltd. drilled the 11-22-53-13W4 in 2010 and fracked the Lower Mannville Sand.  This well did not produce any oil and most likely fracked into bottom water.
 
Enercapita proposes the 16-22 location would be drilled up dip from both the 11-22 and the 02/10-22-053-13W4 wells.  The low oil decline rate of 1.72% from 2003-2014 for the 02/10-22 suggests the reservoir could support another well.  Enercapita estimates the cost to drill the 16-22 location would be approximately $250,000. Once a petrophysical analysis is completed on the 16-22 well it can be determined if a frac is required, with the completion cost estimated at approximately $60,000.

 


Cross Section A-A'
Lower Mannville Sand


Vegreville Facilities
 
At Viking, Enercapita has a 100% working interest in the natural gas compression processing plant located at 11-16-048-13W4, a water disposal facility located at 14-22-047-13W4.  The Company also holds an 84.82842% working interest in the compression station at 10-17-049-13W4 and a 92.12639% working interest in a natural gas gathering system and mulitwell battery located at 08-01-049-14W4.
 
At Bruce, Enercapita holds a 100% working interest and operates a compressor station located at 02-27-051-15W4.
 
At Willingdon, Enercapita holds a 22.357% working interest in a compressor station located at 11-20-055-15W4 operated by Canadian Natural Resources Limited.  The Company holds a 10.42% working interest in a suspended multiwell natural gas battery located at 06-13-052-14W4 which is operated by AlphaBow Energy Ltd.
 
Enercapita holds a 4.368% working interest in a natural gas processing plant located at 06-08-053-16W4 and a 6.25% working interest in a natural gas gathering system and compressor station located at 09-36-055-14W4, all operated by Sequoia Resources Corporation.  The Company also holds a 100% working interest in two abandoned compressor stations located at 10-16-055-15W4 and 16-16-055-15W4. 
 
Vegreville Marketing
 
At Viking, Enercapita has an oil purchase agreement in place with Shell Trading Canada.  The purchase agreement is a 30-day evergreen agreement.  Details on the price structure can be found in the virtual data room for parties that sign a confidentiality agreement.
 
Natural gas from Viking is sold to the Nova Gas Transmission Ltd. pipeline.  Enercapita has a natural gas purchase agreement in place with Suncor Energy Marketing Inc.  The Company has interruptible transportation for 0.3 e3m3 monthly at the Killam meter station and firm service of 11.0 e3m3 monthly at the APN meter station (10.0 e3m3/d in place until August 31, 2021 and 1.0 e3m3/d in place until May 31, 2024).
 
Enercapita has a natural gas purchase agreement in place with Suncor Energy Marketing Inc.  The Company has firm service for 1.5 e3m3/d of natural gas in place until October 31, 2021.  Natural gas from Bruce is sold to the Nova Gas Transmission Ltd. pipeline at the Holden meter station.
 
Natural gas from Willingdon is sold to the Nova Gas Transmission Ltd. pipeline.  Enercapita has a natural gas purchase agreement in place with Suncor Energy Marketing Inc.  The Company has interruptible transportation for 0.5 e3m3 monthly at the Lavoy meter station, 1.0 e3m3 monthly at the Plain Lake meter station and 0.5 e3m3 monthly at the Warwick meter station. 
 
The Company also has a natural gas purchase agreement in place with Satoshi Portal Inc. whereby Enercapita receives DataMine revenue from 0.2683 e3m3/d of natural gas with payment received in Bitcoin every two months.

PROCESS & TIMELINE

Sayer Energy Advisors is accepting cash offers to acquire the Properties until 12:00 pm on Thursday December 10, 2020.
 

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 December 10, 2020.


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 a detailed Confidential Information Binder 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 Binder is the following: summary land information, LMR information, the Sproule Report, most recent net operations summary, detailed facilities information and other relevant technical information.  

Download Confidentiality Agreement

To schedule a time to visit the Data Room, which is situated at Sayer's office, please contact Tom Pavic, Ben Rye or Grazina Palmer at 403.266.6133.

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