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Cor4 Oil Corp.

Property Divestiture
Bid Deadline: November 12, 2020 12:00 PM
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OVERVIEW

COR4 HAS SOLD ITS INTERESTS IN THE DINOSAUR/PATRICIA AND MEDICINE HAT AREAS AS WELL AS CERTAIN INTERESTS IN THE JENNER AREA.  PLEASE REFER TO THE LINK BELOW FOR A LIST OF THE REMAINING WELLS WHICH ARE STILL AVAILABLE.

Updated Well List

Cor4 Oil Corp.
(“Cor4” or the “Company”) has engaged Sayer Energy Advisors to assist with the sale of certain long-life, shallow natural gas assets located in southern Alberta (the “Properties”). The Properties consist of both operated and non-operated interests located in the Jenner, Dinosaur/Patricia, Cessford and Medicine Hat areas, as well as certain miscellaneous interests grouped in a package named Southern Alberta Minors.   

Cor4’s net sales production from the Properties for July 2020 was approximately 4.7 MMcf/d of natural gas (790 boe/d).

The Properties have not been a priority for Cor4 and have been capital deprived since 2015, with base declines greater than similar offsetting operations. After a detailed review of the Properties, the Cor4 team has identified numerous optimization and development initiatives that will increase production and extend the life of the assets.
 

Overview Map Showing the Location of the Divestiture Properties

Production Overview
 
Cor4’s net sales production from the Properties for July 2020 was approximately 4.7 MMcf/d of natural gas (790 boe/d).

 


 

Seismic
 
Cor4 has trade and proprietary seismic over a portion of its lands in southern Alberta, as illustrated on the following plat.  The Company’s interpretations of the seismic are available for viewing on the workstation, which is in the Data Room located in Sayer’s office, by parties which have executed a Confidentiality Agreement.

 

Southern Alberta
Seismic Coverage

JENNER

Township 19-22, Range 5-10 W4

Cor4 holds an average 88% working interest in a large producing shallow natural gas property at Jenner.  The Jenner natural gas property is mostly Crown and includes all of Cor4’s rights to the base of the Second White Speckled Shale Formation.

Cor4 net sales from the Jenner shallow natural gas property for July 2020 was approximately 3.0 MMcf/d (495 boe/d).
 


Jenner, Alberta
Group Plot of Cor4's Natural Gas Wells

Jenner Upside

There are 695 gross active wellbores (617 net) in the Jenner property, which have been deprived of capital since 2015. Annualized base declines for Cor4’s operated shallow natural gas wells since 2015 have been 11.5% compared to 5% for similar offsetting operators.  International Petroleum Corp. operated wellbores immediately south of Cor4 have been further optimized with coil clean-outs, soap string pulls and continuous swabbing programs, resulting in production growth with minimal capital costs and zero new wellbores or completions.

 


The graph below illustrates the dramatic drop in production from a typical Jenner gas gathering system lateral after the termination of wellbore swabbing in August 2015.  A brief swabbing and coil cleanout program was initiated in 2017, as shown below, which briefly brought the lateral’s production to the pre-2015 forecasted decline. 
 


In the summer of 2020, Cor4 commenced a continuous swabbing program on a sample of wellbores to prove the incremental gas potential.  The graph below shows the immediate incremental natural gas production from this program.  This confirms the potential for adding incremental natural gas volumes at Jenner from the swabbing of wellbores.
 


Using offset operator results as well as Cor4’s recent focus on swabbing, Cor4 has identified numerous optimization and development initiatives that will increase production and extend the life of the assets.  Coil tubing mud clean-outs, soap string removals and a continuous swabbing program have the potential to economically increase gas production at Jenner by 370 boe/d (2.2 MMcf/d), when all 695 active wellbores are considered.
 


Volumetric work on the Jenner property shows that a significant portion of the original gas in place for the Jenner asset (referenced below by Bcf per section) remains unrecovered.  The comparable geology and production potential to offsetting operators confirms the potential to optimize natural gas volumes and extend the life of the property.
 


Cor4 also has 35 wellbores that have been drilled and cased but not completed (“DUCs”), which represents additional upside for completing new wellbores with short tie-in options into the existing low-pressure gathering system.  All 35 of these wells were drilled through the Medicine Hat sands, with 28 of them being drilled deeper to terminate below the Second White Specks zone.
 


Belly River Formation
 
Cor4 has done extensive work on evaluating the natural gas potential of the Belly River conventional sands at Jenner, which historically have produced natural gas in isolation or commingled with other shallow natural gas zones.   
 
Cumulative production bubbles shown in red on the following map indicate past or current Belly River sand production and the green diamond symbols show defined bypassed pay for the wells in the offering.

 


Although initial production rates and cumulative production varies widely, with some cases exceeding one Bcf of natural gas, Cor4 has developed a type curve that speaks to a P50 initial production rate of 240 Mcf/d from simple wellbore perforations.  Furthermore, the Jenner area resides within a commingling order that allows for Belly River natural gas to be commingled with existing natural gas production from the Milk River, Medicine Hat, and Second White Speckled Shale formations.  This makes incremental natural gas production even more economic.  Four wellbores were perforated in 2019, with one resulting in increased natural gas production without requirements for swabbing.
 
Specific to the 10-34 natural gas gathering system, Cor4 has identified 50 wellbores in the offering that have bypassed pay in the Belly River sands based on wireline data.  Similar upside can be implied in the 8-16 natural gas gathering system, with some of the opportunities pending removal of soap strings discussed earlier in this upside summary. 


An example of Belly River sand conventional natural gas pay is shows in the following graphic, along with Cor4’s probabilistic type curve based on past Belly River producers in the greater Jenner Area.
 


 


Jenner Facilities

The wells and pipelines shown in red on the following map flow to Cor4’s 82.4% working interest, operated sweet natural gas facility at 10-34-019-09W4. The facility includes compression and dehydration with approximately 8 MMcf/d of design capacity.

The 10-34 plant is dually connected to the TCPL Mainline and out of AECO through a Campus Energy Partners Ltd. line to Empress as shown on the following map. This allows for Cor4 to realize either AECO or Empress natural gas pricing.  Currently all the natural gas flows to AECO.
 


Additionally, the Company holds a 100%, operated working interest in the Princess Shallow Gas gathering system (wells and pipelines in black) which includes the 08-16-020-10W4 natural gas facility with compression and dehydration design capacity of approximately 8 MMcf/d.  Sales gas is connected to TCPL/Nova (Princess-Iddesleigh at 16-16-020-10W4).
 
Cor4 also holds a 39.9% working interest in the 14-23-019-10W4 natural gas facility operated by Canadian Natural Resources Limited.  The 14-23 facility has no current throughput, but includes compression, dehydration and a sales gas connection to TCPL/Nova (Tide Lake North at 03-26-019-10W4).
 
A facility consolidation opportunity to connect the Princess Shallow Gas gathering system to the Jenner 10-34 gas gathering system by reactivating a discontinued line has been identified.  This connection is expected to reduce gathering system pressures, and would potentially negate the need for the 8-16 compressor in the future, thus eliminating the associated operating costs.


Jenner Marketing 

Natural gas is sold to a major oil and natural gas producer on an annual contract which expires October 31, 2021.  The natural gas is delivered at two different TCPL meter stations that connect to the TCPL mainline.  Firm transportation through October 2021 exists for 60 e3m3/day for these two meter stations.  A portion of the shallow gas is pipeline connected to the 10-34 natural gas processing plant which also has the option to deliver out of AECO into the Empress market via a secondary pipeline connection point. 

  
Jenner Reserves
 
The Jenner property was not evaluated as part of Cor4’s annual reserve evaluation.
  
Jenner LMR as of September 5, 2020
 
The majority of the wells and facilities at Jenner are operated.  The LMR of the operated wells and facilities is outlined in the following table.

 


Cor4 has made application to AER to remove $4.1mm in Liabilities from its LMR calculation related to the Jenner property.  Approval is pending and an adjustment is anticipated in the near future.
 
A detailed ARO summary of Cor4’s operated and non-operated wells and facilities will be made available to parties that sign a confidentiality agreement.
 
Jenner Well List


Click here to download the complete well list in Excel.

CESSFORD

Township 23-25, Range 9-12 W4

At Cessford, Cor4 primarily holds a 60% working interest in production operated by Canadian Natural Resources Limited.

Cor4 net sales from Cessford for July 2020 was approximately 254 Mcf/d of natural gas (42 boe/d).

 


Cessford, Alberta
Group Plot of Cor4's Natural Gas Wells

Cessford Upside
 
There has been significant development of the Belly River coals and sands offsetting Cor4’s Cessford property since 2017, with 653 wellbores perforated for multiple zones within a township. None of Cor4’s wellbores have been perforated in the Belly River, which highlights significant low-cost incremental gas production potential from 139 wellbores.
 
Cross section B-B’ details the lateral continuity of the target Belly River interval, and incremental gas production seen from both coal seams as well as Basal Belly River sands.

 


Cross section B-B’ details the lateral continuity of the target Belly River interval, and incremental gas production seen from both coal seams as well as Basal Belly River sands in two offsetting Canadian Natural Resources Limited operated wells. 
 

Cessford Facilities
 
The Company holds a 60% working interest in a compressor station located at 01-28-023-11W4 with sales gas connected to TCPL/Nova (Cessford East at 16-36-023-11W4).  The facility is operated by Canadian Natural Resources Limited.
 
Cessford Marketing
 
Natural gas is sold to a major oil and natural gas producer on an annual contract which expires October 31, 2021.  The natural gas is delivered at one TCPL meter station that connects to the TCPL mainline.  There is no firm transportation at this meter station and the Company has successfully delivered gas on interruptible service. 
 
Cessford Reserves
 
The Cessford property was not evaluated as part of Cor4’s annual reserve evaluation.
 
Cessford LMR as of September 5, 2020
 
The majority of the wells and facilities at Cessford are non-operated.  The LMR of the operated wells is outlined in the following table.

 


A detailed ARO summary of Cor4’s operated and non-operated wells and facilities will be made available to parties that sign a confidentiality agreement.

Cessford Well List

Click here to download the complete well list in Excel.

SOUTHERN ALBERTA MINORS

Township 21-33, Range 1-9 W4

The Southern Alberta Minors property consists of various operated and non-operated working interests and royalty interests which are located northeast of the other properties.

Cor4 net sales from the Southern Alberta Minors for July 2020 was approximately 390 Mcf/d of natural gas (65 boe/d).

 


Southern Alberta Minors
Group Plot of Cor4's Natural Gas Wells


Southern Alberta Minors Facilities
 
At Southern Alberta Minors, Cor4 has an interest in the facilities outlined below.
 
In the Deer / Atlee-Buffalo area, Cor4 operates and holds a 100% working interest in the Gulf Deer Gas Gathering System which delivers to a natural gas facility located at 01-03-024-06W4.  Sales gas is connected to TCPL/Nova (Bindloss West at 08-28-022-05W4).
 
In the Sedalia area Cor4 holds a 20.6% working interest in the Baytex operated Sedalia Gas Plant at 9-29-031-05W4 which is not currently producing.  Cor4 also has a working interest in the Sedalia gas gathering system.
 
The Company has various additional operated and non-operated working interests in other areas.  Detailed facility information will be made available to parties that execute a confidentiality agreement.

Southern Alberta Minors Marketing
 
Natural gas is sold to a major oil and natural gas producer on an annual contract which expires October 31, 2021.  The natural gas is currently delivered at threeTCPL meter stations that connect to the TCPL mainline.  Firm transportation through October 2021 exists for 11.5 e3m3/day for these meter stations.
 
Southern Alberta Minors Reserves
 
The Southern Alberta Minors property was not evaluated as part of Cor4’s annual reserve evaluation.
 
Southern Alberta Minors LMR as of September 5, 2020
 
The majority of the wells and facilities at Southern Alberta Minors are non-operated.  The LMR of the operated wells is outlined in the following table.

 


A detailed ARO summary of Cor4’s operated and non-operated wells and facilities will be made available to parties that sign a confidentiality agreement.

Southern Alberta Minors 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 November 12, 2020.
 

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 November 12, 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 (brye@sayeradvisors.com) or fax (403.266.4467).  

Included in the Confidential Information Binder is the following: summary land information, the GLJ Report, LMR information, 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 Ben Rye, Tom Pavic or Grazina Palmer at 403.266.6133.

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