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Under Review / Insignia Energy Ltd.
Insignia Energy Ltd.
Property DivestitureBid Deadline: October 13, 2022
12:00 PM
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OVERVIEW
Sayer Energy Advisors has been engaged to assist Insignia Energy Ltd. (“Insignia” or the “Company”) with the sale of its non-core oil and natural gas properties located in the Caroline, Ferrier, Honeysuckle, Birch-Mannville-Wildmere, Crossfire, Doris-Corbett, and Widewater areas of Alberta as well as minor interests in various additional areas of Alberta (the “Properties”).
Total production net to Insignia from the Properties has averaged approximately 307 boe/d, consisting of 1.6 MMcf/d of natural gas and 46 barrels of oil and natural gas liquids per day.
Recent net operating income from the producing properties has averaged approximately $225,000/month or approximately $2.7 million on an annualized basis.
At Caroline, Insignia holds various working interests (average 63%) in 26 sections of land. Production net to Insignia from Caroline has recently averaged approximately 1.5 MMcf/d of natural gas and 38 barrels of natural gas liquids (282 boe/d).
At Ferrier, Insignia holds an average 40% working interest in three sections of land including rights in the Cardium Formation and Mannville Group. Current production net to Insignia from the well Petrus WillGr 100/08-04-039-06W5/2 is approximately 54 Mcf/d of natural gas and three barrels of oil and natural gas liquids per day (12 boe/d).
At Honeysuckle, Insignia holds a 65% working interest in one section of land (P&NG below base Belly River to base Mannville). Current production from Honeysuckle net to the Company is approximately 49 Mcf/d of natural gas and minor volumes of natural gas liquids (eight boe/d) from the Upper Mannville well Hawk Honey 102/16-20-046-26W4/2.
At Birch-Mannville-Wildmere, Insignia holds various working interests (average 45%) in 14 sections of land. Production net to Insignia from Birch-Mannville-Wildmere has recently averaged approximately five barrels of oil per day and minor volumes of natural gas (five boe/d).
At Crossfire, Insignia holds a 15% working interest in one half-section of land (P&NG below base Mannville to base Nisku). The Crossfire property is currently shut-in. The Nisku well Daylight Pembina 100/09-01-050-06W5/0 was shut-in in April 2020. Production capability net to Insignia from the 09-01 well is approximately 15 barrels of oil per day from the Nisku Formation.
At Doris-Corbett, Insignia holds an average 55.5% working interest in six sections of land. There is currently no production from this property.
At Widewater, Insignia holds a 78% working interest in 9.5 sections of land prospective for oil and natural gas in the Gilwood and Bluesky formations. There is currently no production from the Widewater property. Insignia holds the P&NG rights in the Clearwater Formation at Widewater. There has been significant land sale and drilling activity in the greater Widewater area targeting the Clearwater Formation.
The Company also holds minor interests in non-producing properties located in the Beaverhill Lake, Crossfield, Crystal, Dawson, Eaglesham, Endiang, Fenn West, Fenn-Big Valley, Germain, Golden Spike, Grande Prairie, Harmattan, Holmberg, Iron Springs, Lloydminster, Majeau, Manola, Marten Hills, Mink Lake, Newton, Paradise, Pembina, Petitot, Provost, Ranfurly, Redwater, Retlaw, Rivercourse Omega, Sedalia, Sibbald, Sounding Lake, Springburn, Tangent, Thorsby, West Pembina, Windfall and Wood River areas of Alberta.
Insignia’s strong preference is to sell all of the Properties in one transaction.
Overview Map Showing Location of the Divestiture Properties
Production, Reserves & Financial Overview
Total production net to Insignia from the Properties has averaged approximately 307 boe/d, consisting of 1.6 MMcf/d of natural gas and 46 barrels of oil and natural gas liquids per day.
Recent net operating income from the producing properties has averaged approximately $225,000/month or approximately $2.7 million on an annualized basis.
Reserves Overview
McDaniel & Associates Consultants Ltd. (“McDaniel”) prepared an independent reserves evaluation of the Properties (the “McDaniel Report”) as part of its year-end reporting. The McDaniel Report is effective December 31, 2021 using an average of McDaniel, GLJ Ltd. and Sproule Associates Limited (“Jan 2022 Consultant Average”) forecast pricing as of January 1, 2022.
McDaniel estimated that as of December 31, 2021, the Properties contained remaining proved plus probable reserves of 16.4 Bcf of natural gas and 467,000 barrels of oil and natural gas liquids (3.2 million boe), with an estimated net present value of $12.0 million using forecast pricing at a 10% discount.
LMR as of July 2, 2022
As of July 2, 2022, the Properties had a deemed net asset value of ($2.1 million) (deemed assets of $3.7 million and deemed liabilities of $5.9 million), with an LMR ratio of 0.64.
The Company has additional information on asset retirement obligations and Site Rehabilitation Program funding which will be made available in the virtual data room to parties that sign a confidentiality agreement.
CAROLINE
At Caroline, Insignia holds various working interests (average 63%) in 26 sections of land.
Production net to Insignia from Caroline has recently averaged approximately 1.5 MMcf/d of natural gas and 38 barrels of natural gas liquids (282 boe/d).
Current estimated net operating income from Caroline is approximately $210,000 per month or $2.5 million on an annualized basis.
The Company has a drilling inventory at Caroline which includes four booked horizontal upside locations within the Glauconitic and Ostracod formations. Insignia believe there is significant additional un-booked upside potential. The regional sand deposits in the Caroline area contain large estimated original gas in place (“OGIP”) with approximately 50 Bcf per section.
The Caroline property has year-round access with extensive access to infrastructure.
Caroline, Alberta
Group Plot of Insignia's Natural Gas Wells
Gross Current Production: 2.9 MMcf/d, Gross Cum: 27.2 Bcf
The issue has since been resolved with the replacement of the pipeline which affected the wells in 034-07W5. The production from the affected wells at Caroline was recently brought back on stream.
The following map shows offsetting industry drilling activity which has focused on horizontally targeting both the Mannville Group and the Cardium Formation.
Certus Oil & Gas Inc., TAQA, and Whitecap Resources Inc. have been primarily targeting the Mannville Group.
Insignia’s lands at Caroline contain stacked Mannville reservoirs including the Glauconitic Sandstone Formation and the Ostracod Zone. The reservoirs are predominantly in stacked, contiguous shoreline trends of the Ostracod “C” and “D” as well as associated channel events.
The Glauconitic Sandstone reservoir occurs as a regionally thick incised valley channel and as shallow shelf, tidal dominated sands across the Company’s lands.
The Mannville deposits at Caroline are within the Deep Basin. Vertical wells in the area have up to seven intervals that are frac’d and commingled, with over 75 metres of thickness.
The Company has four booked horizontal upside locations and believe there is significant additional un-booked upside potential at Caroline.
Ostracod "D"
The Ostracod “D” reservoir contains net pay thicknesses of over three metres. The thickness varies minimally over the area, including the prospective lands. This allows for predictability of the sand deposition while reducing development risk.
The Ostracod “D” is found at true vertical depths from 2,900-3,500 metres and is developed in three cycles; the Upper, Middle and Basal as shown in the well log that follows. The gross thickness is approximately 32 metres. Net thickness of the clean sand reaches in excess of 12 metres allowing for significant reservoir development.
Temperature in the reservoir is approximately 95°C, with pressures of 30-32 MPa and porosity ranging from 3%-18%. Natural gas from the Ostracod “D” zone is liquids-rich, containing approximately 20-30 barrels of liquids per MMcf of natural gas. It is estimated that the Ostracod “D” contains OGIP of approximately 25 Bcf per section at Caroline.
Net clean sand over prospective Insignia lands range from 3-8 metres. Younger Glauconitic channel development is important as it cuts down and removes the Upper “D” sand in areas where the Glauconitic channel is deeply cut.
Ostracod "D" Type Log
Ostracod "D" Upper - Net Sand Map
Ostracod "D" Middle - Net Sand Map
While Ostracod “C” pay is generally thinner, it often has higher porosity and permeability compared to the Glauconitic and Ostracod “D” intervals, resulting in lower OGIP but with strong deliverability.
The depositional environment led to early regressive, shallow, stacked shoreface deposits and nearshore bars and channels. The prospectivity of the deposits within the region allows for large scale exploitation within the region. The Ostracod “C” overlies the Ellerslie channels at Caroline.
The Ostracod “C” is found at true vertical depths from 2,900-3,500 metres. The gross thickness is approximately 25 metres. Temperature in the reservoir is approximately 95°C, with pressures of 30-32 MPa and porosity ranging from 3%-18%. Natural gas from the Ostracod “C” zone is liquids-rich, containing approximately 20-30 barrels of liquids per MMcf of natural gas. It is estimated that the Ostracod “C” contains OGIP of approximately 10 Bcf per section at Caroline.
Ostracod "C" Type Log
Ostracod "C" Net Sand Map
Glauconitic sand deposition in the area is found in both channel and tidal sands. Clean channel sands with porosities up to 9% provide excellent reservoir. Tidal sand deposits allow for extensive regional development. Multi-zone potential reduces the overall development risk of the Glauconitic Sandstone at Caroline.
Channel sand development is located primarily in the northwestern portion of the lands and thickens to over 30 metres. The tidal sand deposits are extensive and are primarily 8-10 metres thick over Insignia’s lands.
The Glauconitic Sandstone is found at true vertical depths from 2,900-3,500 metres. The gross thickness of the channels is approximately 35 metres. The gross thickness of the tidal sand is approximately 10 metres. Temperature in the reservoir is approximately 100°C, with pressures of 30-32 MPa and porosity ranging from 3%-9%. Natural gas from the Glauconitic is liquids-rich, containing approximately 20-30 barrels of liquids per MMcf of natural gas. It is estimated that the Glauconitic contains OGIP of approximately 40 Bcf per section at Caroline.
Glauconitic Sandstone Formation
Regional Glauconitic Net Sand Map
Insignia is a member of the Methane Emission Management Program (“MEMP”) that is intended to speed the deployment of new technologies capable of detecting and quantifying methane releases. The Sundre Petroleum Operators Group (“SPOG”) area is selected for the pilot program.
The MEMP is designed to develop a comprehensive inventory of methane releases and equipment using ground surveys with optical gas imaging for release detection, and high flow sampler and quantitative optical gas imaging, with outliers validated by follow-up surveys.
The objectives of the program include evaluating selected alternative technologies and confirm technical and economic viability at scale and to develop an area-based alternative fugitive emission management program (“Alt-FEMP”) for the SPOG area, gain Alberta Energy Regulator (“AER”) approval, deploy the programs and monitor its performance through 2022. The MEMP is striving for 100% producer participation.
The goal is to establish the SPOG as the preferred pilot area for new methane detection and quantification technologies. Incorporate new technologies into the Alt-FEMP programs as appropriate.
The program is intended to develop the data tools and systems to collect all pertinent methane information for analysis and reporting and export the knowledge and systems to other applications and areas.
The 2022 conversion of high bleed to low bleed pneumatic devices is on-going in the Caroline area, eliminating the largest sources of vented methane by equipment type.
Caroline Facilities & Operations
At Caroline, Insignia owns the following equipment and facilities:
- Battery (oil) & stabilizer, natural gas compressor and transmission line: Caroline 06-15-032-05W5 (Insignia working interest: 20%)
- Insignia’s Gas Test Battery 16-13-034-07W5 (Insignia working interest: 100%)
- Single well battery (gas): Caroline 16-13-034-07W5 (Insignia working interest: 100%)
- Single well battery (gas): Insignia 102 Carol 08-14-034-07W5 (Insignia working interest: 100%)
- Single well battery (gas): Insignia Caroline 16-12-034-07W5 (Insignia working interest: 100%)
- Single well battery (gas): Insignia Caroline 07-36-033-07W5 (Insignia working interest: 87.5%)
- Single well battery (gas): Insignia Energy Carol 15-29-033-06W5 (Insignia working interest: 100%)
- Single well battery (gas): Insignia 01-13-034-07W5 (2-13) (Insignia working interest: 100%)
- Single well battery (gas): Caroline 02-20-033-06W5 (Insignia working interest: 100%)
Water from Insignia’s operated wells at Caroline is trucked to Newalta 16-11-037-05W5 and natural gas is processed at the TAQA Sundre 03-26-033-06W5 plant and sold at the Jackson Creek 2146 metre station through TCPL.
Caroline Reserves
McDaniel & Associates Consultants Ltd. (“McDaniel”) prepared an independent reserves evaluation of the Properties (the “McDaniel Report”). The McDaniel Report is effective December 31, 2021 using an average of McDaniel, GLJ Ltd. and Sproule Associates Limited (“Jan 2022 Consultant Average”) forecast pricing as of January 1, 2022.
McDaniel estimated that as of December 31, 2021, the Caroline property contained remaining proved plus probable reserves of 16.3 Bcf of natural gas and 447,000 barrels of oil and natural gas liquids (3.2 million boe), with an estimated net present value of $11.7 million using forecast pricing at a 10% discount.
As of July 2, 2022, Insignia’s Caroline property had a deemed net asset value of $2.2 million (deemed assets of $3.5 million and deemed liabilities of $1.2 million), with an LMR ratio of 2.85.
Prior to shutting in the four Insignia operated wells, the Company’s LMR ratio at Caroline was 4.01, with a deemed net asset value of $3.7 million (deemed assets of $4.9 million and deemed liabilities of $1.2 million).
Caroline Well List
Click here to download the complete well list in Excel.
FERRIER
Township 39, Range 6 W5
At Ferrier, Insignia holds an average 40% working interest in three sections of land including rights in the Cardium Formation and Mannville Group.
Current production net to Insignia from the well Petrus WillGr 100/08-04-039-06W5/2 is approximately 54 Mcf/d of natural gas and three barrels of oil and natural gas liquids per day
(12 boe/d).
Current estimated net operating income from Ferrier is approximately $17,000 per month or $204,000 on an annualized basis.
Ferrier, Alberta
Petrus WillGr 100/08-04-039-06W5/2
Oil and Natural Gas Well (Insignia W.I.: 40%)
Ferrier Facilities
Insignia holds a 25% working interest in a 100 HP one stage compressor at 03-33-038-06W5 at Ferrier.
Ferrier Reserves
McDaniel & Associates Consultants Ltd. (“McDaniel”) prepared an independent reserves evaluation of the Properties (the “McDaniel Report”). The McDaniel Report is effective December 31, 2021 using an average of McDaniel, GLJ Ltd. and Sproule Associates Limited (“Jan 2022 Consultant Average”) forecast pricing as of January 1, 2022.
McDaniel estimated that as of December 31, 2021, the Ferrier property contained remaining proved plus probable reserves of 51 MMcf of natural gas and 9,000 barrels of oil and natural gas liquids (17,000 boe), with an estimated net present value of $199,000 using forecast pricing at a 10% discount.
Ferrier LMR
Insignia does not operate any wells at Ferrier.
Ferrier Well List
Click here to download the complete well list in Excel.
BIRCH-MANNVILLE-WILDMERE
At Birch-Mannville-Wildmere, Insignia holds various working interests (average 45%) in 14 sections of land.
Production net to Insignia from Birch-Mannville-Wildmere has recently averaged approximately five barrels of oil per day and minor volumes of natural gas (five boe/d).
There has been significant offsetting production in the Mannville/Wildmere area, by Canadian Natural Resources Limited, Cenovus Energy Inc., and Gear Energy Ltd. targeting Mannville oil.
Birch-Mannville-Wildmere, Alberta
Gross Production Group Plot of Insignia's Oil and Natural Gas Wells
At Birch-Mannville-Wildmere, Insignia holds a 10.0249% working interest in the Wildmere Gathering and Dehydration system and compressor at 13-20-048-06W4.
The Wildmere property was not evaluated in the McDaniel Report.
Mannville Reserves
The Mannville property was not evaluated in the McDaniel Report.
Birch Reserves
The Birch property was not evaluated in the McDaniel Report.
Birch LMR as of July 2, 2022
As of July 2, 2022, Insignia’s Birch property had a deemed net asset value of ($263,859) (deemed assets of $0 and deemed liabilities of $263,859), with an LMR ratio of 0.00.
As of July 2, 2022, Insignia’s Mannville property had a deemed net asset value of ($252,962) (deemed assets of $0 and deemed liabilities of $252,962), with an LMR ratio of 0.00.
Insignia does not operate any wells at Wildmere.
Birch-Mannville-Wildmere Well List
Click here to download the complete well list in Excel.
CROSSFIRE
At Crossfire, Insignia holds a 15% working interest in one half-section of land (P&NG below base Mannville to base Nisku).
The Crossfire property is currently shut-in. The Nisku well Daylight Pembina 100/09-01-050-06W5/0 was shut-in in April 2020. Production capability net to Insignia from the 09-01 well is approximately 15 barrels of oil per day from the Nisku Formation.
Crossfire, Alberta
Daylight Pembina 100/09-01-050-06W5/0 (Insignia W.I.: 15%)
Insignia does not own any facilities at Crossfire.
Crossfire Reserves
The Crossfire property was not evaluated in the McDaniel Report.
Crossfire LMR
Insignia does not operate any wells at Crossfire.
Crossfire Well List
Click here to download the complete well list in Excel.
DORIS-CORBETT
At Doris-Corbett, Insignia holds an average 55.5% working interest in six sections of land. There is currently no production from this property.
Insignia has initiated abandonment operations under the AER’s Area Based Closure program, with plans to abandon all wells at Doris-Corbett by the end of 2022.
Insignia does not own any facilities at Doris-Corbett.
Doris-Corbet LMR as of July 2, 2022
As of July 2, 2022, Insignia’s Doris-Corbett property had a deemed net asset value of ($511,755) (deemed assets of $0 and deemed liabilities of $511,755), with an LMR ratio of 0.00.
Doris-Corbett Reserves
The Doris-Corbett property was not evaluated in the McDaniel Report.
Doris-Corbett Well List
Click here to download the complete well list in Excel.
WIDEWATER
At Widewater, Insignia holds a 78% working interest in 9.5 sections of land.
Insignia holds the P&NG rights in the Clearwater Formation at Widewater. There has been significant land sale and drilling activity in the greater Widewater area targeting the Clearwater Formation.
There is currently no production from the Widewater property. The Widewater property is also prospective for oil and natural gas in the Gilwood and Bluesky formations.
Widewater, Alberta
Adjacent Clearwater Activity
Insignia does not own any facilities at Widewater.
Widewater LMR as of July 2, 2022
As of July 2, 2022, Insignia’s Widewater property had a deemed net asset value of ($460,632) (deemed assets of $0 and deemed liabilities of $460,632), with an LMR ratio of 0.00.
The Widewater property was not evaluated in the McDaniel Report.
Widewater Well List
Click here to download the complete well list in Excel.
ADDITIONAL MINOR PROPERTIES
The Company also holds minor interests in non-producing properties located in the Beaverhill Lake, Crossfield, Crystal, Dawson, Eaglesham, Endiang, Fenn West, Fenn-Big Valley, Germain, Golden Spike, Grande Prairie, Harmattan, Holmberg, Iron Springs, Lloydminster, Majeau, Manola, Marten Hills, Mink Lake, Newton, Paradise, Pembina, Petitot, Provost, Ranfurly, Redwater, Retlaw, Rivercourse Omega, Sedalia, Sibbald, Sounding Lake, Springburn, Tangent, Thorsby, West Pembina, Windfall and Wood River areas of Alberta.
The additional minor properties were not evaluated in the McDaniel Report.
As of July 2, 2022, Insignia’s additional minor properties had a deemed net asset value of ($3.1 million) (deemed assets of $0 and deemed liabilities of $3.1 million), with an LMR ratio of 0.00.
Click here to download the complete well list in Excel.
PROCESS & TIMELINE
Sayer Energy Advisors is accepting offers to acquire the Properties until 12:00 pm on Thursday October 13, 2022. Insignia's strong preference is to sell all of the Properties in one transaction.
transaction(s) with the party(ies) submitting the most acceptable proposal(s) at the conclusion of the process.
Sayer Energy Advisors is accepting offers from interested parties until
noon on Thursday October 13, 2022.
NOTE REGARDING A SAYER PROCESS
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 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: detailed land information, the McDaniel Report, LMR information, most recent net operations summary and other relevant technical information.
Download Confidentiality Agreement
To receive further information on the Properties please contact Ben Rye, Tom Pavic or Sydney Birkett at 403.266.6133.