Offering Details
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Under Review / Tamarack Valley Energy Ltd.
Tamarack Valley Energy Ltd.
Property DivestitureBid Deadline: June 16, 2022
12:00 PM
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OVERVIEW
Tamarack Valley Energy Ltd. (“Tamarack Valley” or the “Company”) has engaged Sayer Energy Advisors to assist the Company with the sale of certain non-core natural gas interests located in the Forty Mile, Pakowki and Quaich areas of southern Alberta (the “Properties”). The Properties consist of operated, high working interest natural gas production. Tamarack Valley is selling the Properties in order to focus its operations on its core assets.
Average daily production net to Tamarack Valley from the Properties for the month of March 2022 was approximately 2.6 MMcf/d of natural gas (442 boe/d).
Operating income net to Tamarack Valley from the Properties in the first quarter of 2022 averaged approximately $180,000 per month, or $2.2 million on an annualized basis. Tamarack Valley is forecasting monthly net operating income to exceed $300,000 based on current pricing.
Average daily production net to Tamarack Valley from the Properties for the month of March 2022 was approximately 2.6 MMcf/d of natural gas (442 boe/d).
Operating income net to Tamarack Valley from the Properties in the first quarter of 2022 averaged approximately $180,000 per month, or $2.2 million on an annualized basis. Tamarack Valley is forecasting monthly net operating income to exceed $300,000 based on current pricing.
Overview Map Showing the Location of the Divestiture Properties
Production Overview
Average daily production net to Tamarack Valley from the Properties for the month of March 2022 was approximately 2.6 MMcf/d of natural gas and minor amounts of natural gas liquids per day (442 boe/d) as outlined below.
Average daily production net to Tamarack Valley from the Properties for the month of March 2022 was approximately 2.6 MMcf/d of natural gas and minor amounts of natural gas liquids per day (442 boe/d) as outlined below.
Operating income net to Tamarack Valley from the Properties in the first quarter of 2022 averaged approximately $180,000 per month, or $2.2 million on an annualized basis. Tamarack Valley is forecasting monthly net operating income to exceed $300,000 based on current pricing.
Gross Production Group Plot of Tamarack Valley's Natural Gas Wells
LMR Summary
As of April 2, 2022, Tamarack Valley’s net deemed asset value for the Properties was $7.6 million (deemed assets of $11.8 million and deemed liabilities of $4.2 million), with an LMR ratio of 2.80.
The LMR for each of the Properties as of April 2, 2022 is summarized below.
As of April 2, 2022, Tamarack Valley’s net deemed asset value for the Properties was $7.6 million (deemed assets of $11.8 million and deemed liabilities of $4.2 million), with an LMR ratio of 2.80.
The LMR for each of the Properties as of April 2, 2022 is summarized below.
Summary of LMR by Property
Tamarack Valley has an internal asset retirement obligation (“ARO”) estimate for the Pakowki and Forty Mile properties. The internal estimate accounts for wells only and totals approximately $1.9 million. While this estimate excludes $167,500 in deemed facility liabilities, it is considerably lower than the $3.2 million in deemed liabilities assigned by the Alberta Energy Regulator (“AER”) for these properties.
The internal ARO estimate is based on type well abandonment costs of $10,600 per well and a detailed breakdown of that cost will be provided in the virtual data room for parties which execute a confidentiality agreement. Due to the nature of these abandonments being single zone, shallow and sweet, they can be completed by wireline alone. The Company believes there will be a scale efficiency available with multiple wells being able to be abandoned per day which will allow for outperformance of AER estimates. Tamarack Valley’s estimate of $10,000 per well for reclamation is based on experience with similar wells in the area (shallow natural gas, minimal disturbance leases) and would also benefit from the ability to scale up the program.
Seismic Overview
The Company does not have an interest in any seismic data relating to the Properties.
Reserves Overview
GLJ Ltd. (“GLJ”) prepared an independent reserves evaluation of the Quaich property as part of the Company’s year-end evaluation (the “GLJ Report”). The GLJ Report is effective December 31, 2021 using an average of GLJ, McDaniel & Associates Consultants Ltd. and Sproule Associates Limited’s January 1, 2022 forecast pricing.
The Forty Mile and Pakowki properties were not evaluated as part of the GLJ Report.
Marketing Overview
Tamarack Valley does not have any specific natural gas contracts in place for the Properties as the natural gas is pooled.
The Forty Mile and Pakowki properties are close in proximity to one another as shown in the following image. Natural gas from Forty Mile flows to Montana and natural gas from Pakowki flows to the Nova Gas Transmission Line. Natural gas from Quaich and Pakowki is sold at the AECO NIT hub.
The internal ARO estimate is based on type well abandonment costs of $10,600 per well and a detailed breakdown of that cost will be provided in the virtual data room for parties which execute a confidentiality agreement. Due to the nature of these abandonments being single zone, shallow and sweet, they can be completed by wireline alone. The Company believes there will be a scale efficiency available with multiple wells being able to be abandoned per day which will allow for outperformance of AER estimates. Tamarack Valley’s estimate of $10,000 per well for reclamation is based on experience with similar wells in the area (shallow natural gas, minimal disturbance leases) and would also benefit from the ability to scale up the program.
Seismic Overview
The Company does not have an interest in any seismic data relating to the Properties.
Reserves Overview
GLJ Ltd. (“GLJ”) prepared an independent reserves evaluation of the Quaich property as part of the Company’s year-end evaluation (the “GLJ Report”). The GLJ Report is effective December 31, 2021 using an average of GLJ, McDaniel & Associates Consultants Ltd. and Sproule Associates Limited’s January 1, 2022 forecast pricing.
The Forty Mile and Pakowki properties were not evaluated as part of the GLJ Report.
Marketing Overview
Tamarack Valley does not have any specific natural gas contracts in place for the Properties as the natural gas is pooled.
The Forty Mile and Pakowki properties are close in proximity to one another as shown in the following image. Natural gas from Forty Mile flows to Montana and natural gas from Pakowki flows to the Nova Gas Transmission Line. Natural gas from Quaich and Pakowki is sold at the AECO NIT hub.
QUAICH
Township 9-10, Range 3 W5
At Quaich, Tamarack Valley holds a 100% working interest in P&NG rights to the base of the Blairmore Group in two sections of land on which there are two natural gas wells producing from the Cadomin Formation. The wells are connected to the Company’s 100% owned and operated natural gas plant at 13-34-008-02W5.
Average daily production net to Tamarack Valley from Quaich for the month of March 2022 was approximately 2.2 MMcf/d of natural gas and minor volumes of natural gas liquids per day (375 boe/d).
Tamarack Valley’s ownership in the infrastructure and facilities at Quaich results in a high netback from the property. Operating income net to Tamarack Valley from the Quaich property for the first quarter of 2022 averaged approximately $175,000 per month, or $2.1 million on an annualized basis.
At Quaich, Tamarack Valley holds a 100% working interest in P&NG rights to the base of the Blairmore Group in two sections of land on which there are two natural gas wells producing from the Cadomin Formation. The wells are connected to the Company’s 100% owned and operated natural gas plant at 13-34-008-02W5.
Average daily production net to Tamarack Valley from Quaich for the month of March 2022 was approximately 2.2 MMcf/d of natural gas and minor volumes of natural gas liquids per day (375 boe/d).
Tamarack Valley’s ownership in the infrastructure and facilities at Quaich results in a high netback from the property. Operating income net to Tamarack Valley from the Quaich property for the first quarter of 2022 averaged approximately $175,000 per month, or $2.1 million on an annualized basis.
Quaich, Alberta
Gross Production Group Plot of Tamarack Valley's Natural Gas Wells
Quaich Facilities
At Quaich, Tamarack Valley has a 100% working interest in the Cowley-Todd natural gas plant as outlined below. The natural gas plant has meter connection to the Nova Gas Transmission Line and includes refrigeration designed for 20 MMcf/d of natural gas. Throughput at the plant is currently limited by compression to 10 MMcf/d of natural gas.
At Quaich, Tamarack Valley has a 100% working interest in the Cowley-Todd natural gas plant as outlined below. The natural gas plant has meter connection to the Nova Gas Transmission Line and includes refrigeration designed for 20 MMcf/d of natural gas. Throughput at the plant is currently limited by compression to 10 MMcf/d of natural gas.
Cowley-Todd Creek Gas Processing Facility
13-34-008-02W5
Quaich Marketing
Tamarack Valley processes its natural gas at its 100% owned natural gas plant at Quaich. The plant is meter connected to the Nova Gas Transmission Line where the Company’s natural gas is sold at the AECO NIT hub.
Quaich Reserves
GLJ estimates that, as of December 31, 2021, the Quaich property contained remaining proved plus probable reserves of 9.3 Bcf of natural gas (1.6 million boe), with an estimated net present value of $8.1 million using forecast pricing at a 10% discount.
Tamarack Valley processes its natural gas at its 100% owned natural gas plant at Quaich. The plant is meter connected to the Nova Gas Transmission Line where the Company’s natural gas is sold at the AECO NIT hub.
Quaich Reserves
GLJ estimates that, as of December 31, 2021, the Quaich property contained remaining proved plus probable reserves of 9.3 Bcf of natural gas (1.6 million boe), with an estimated net present value of $8.1 million using forecast pricing at a 10% discount.
Tamarack Valley internally updated the reserves associated with the Quaich property as of April 1, 2022, using an average of GLJ, McDaniel & Associates Consultants Ltd. and Sproule Associates Limited’s April 1, 2022 forecast pricing. The update increased the PDP net present value at a 10% discount to $7.0 million.
Quaich LMR
As of April 2, 2022, Tamarack Valley’s net deemed asset value for Quaich was $9.2 million (deemed assets of $10.0 million and deemed liabilities of $756,722), with an LMR ratio of 13.17.
Quaich LMR
As of April 2, 2022, Tamarack Valley’s net deemed asset value for Quaich was $9.2 million (deemed assets of $10.0 million and deemed liabilities of $756,722), with an LMR ratio of 13.17.
Quaich Well List
Click here to download the complete well list in Excel.
Click here to download the complete well list in Excel.
PAKOWKI
Township 4-5, Range 8-9 W4
In the Pakowki area, Tamarack Valley holds a 100% working interest in 22.25 sections of land and a 72.97% working interest in one additional section. The Company produces natural gas from the Medicine Hat Formation from several wells. Natural gas from Pakowki is transported via pipeline and sold into the Nova Gas Transmission Line.
Average daily production net to Tamarack Valley from Pakowki for the month of March 2022 was approximately 303 Mcf/d of natural gas (51 boe/d).
In the Pakowki area, Tamarack Valley holds a 100% working interest in 22.25 sections of land and a 72.97% working interest in one additional section. The Company produces natural gas from the Medicine Hat Formation from several wells. Natural gas from Pakowki is transported via pipeline and sold into the Nova Gas Transmission Line.
Average daily production net to Tamarack Valley from Pakowki for the month of March 2022 was approximately 303 Mcf/d of natural gas (51 boe/d).
Pakowki, Alberta
Gross Production Group Plot of Tamarack Valley's Natural Gas Wells
Pakowki Facilities
At Pakowki, Tamarack Valley has a 100% working interest in a natural gas compressor at 16-24-005-09W4 as outlined below.
At Pakowki, Tamarack Valley has a 100% working interest in a natural gas compressor at 16-24-005-09W4 as outlined below.
Pakowki Marketing
The Company sells its natural gas from Pakowki into the Nova Gas Transmission Line at the AECO NIT hub.
Pakowki Reserves
The Pakowki property was not evaluated in the GLJ Report.
Pakowki LMR
As of April 2, 2022, Tamarack Valley’s net deemed asset value for Pakowki was ($1.3 million) (deemed assets of $1.4 million and deemed liabilities of $2.8 million), with an LMR ratio of 0.52.
The Company sells its natural gas from Pakowki into the Nova Gas Transmission Line at the AECO NIT hub.
Pakowki Reserves
The Pakowki property was not evaluated in the GLJ Report.
Pakowki LMR
As of April 2, 2022, Tamarack Valley’s net deemed asset value for Pakowki was ($1.3 million) (deemed assets of $1.4 million and deemed liabilities of $2.8 million), with an LMR ratio of 0.52.
Pakowki Well List
Click here to download the complete well list in Excel.
Click here to download the complete well list in Excel.
FORTY MILE
Township 7, Range 10-11 W4
At Forty Mile, Tamarack Valley holds a 100% working interest in seven sections of land on which there are 18 natural gas wells producing from the Medicine Hat Formation. Natural gas from Forty Mile is transported via pipeline and sold in Montana.
Average daily production net to Tamarack Valley from Forty Mile for the month of March 2022 was approximately 101 Mcf/d of natural gas (17 boe/d).
At Forty Mile, Tamarack Valley holds a 100% working interest in seven sections of land on which there are 18 natural gas wells producing from the Medicine Hat Formation. Natural gas from Forty Mile is transported via pipeline and sold in Montana.
Average daily production net to Tamarack Valley from Forty Mile for the month of March 2022 was approximately 101 Mcf/d of natural gas (17 boe/d).
Forty Mile, Alberta
Gross Production Group Plot of Tamarack Valley's Natural Gas Wells
Forty Mile Facilities
The Company does not have ownership in any facilities at Forty Mile.
Forty Mile Marketing
The Company sells its natural gas from Forty Mile in Montana via the Canadian Montana Pipeline.
Forty Mile Reserves
The Forty Mile property was not evaluated in the GLJ Report.
Forty Mile LMR
As of April 2, 2022, Tamarack Valley’s net deemed asset value for Forty Mile was ($298,327) (deemed assets of $410,499 and deemed liabilities of $708,826), with an LMR ratio of 0.58.
The Company does not have ownership in any facilities at Forty Mile.
Forty Mile Marketing
The Company sells its natural gas from Forty Mile in Montana via the Canadian Montana Pipeline.
Forty Mile Reserves
The Forty Mile property was not evaluated in the GLJ Report.
Forty Mile LMR
As of April 2, 2022, Tamarack Valley’s net deemed asset value for Forty Mile was ($298,327) (deemed assets of $410,499 and deemed liabilities of $708,826), with an LMR ratio of 0.58.
Forty Mile Well List
Click here to download the complete well list in Excel.
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 June 16, 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.
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 16, 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.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.
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, the GLJ Report, most recent net operations summary, 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.