CALGARY, A.B. – Tourmaline Oil Corp. announced today that they have entered into an agreement with Shell Canada Energy to buy strategic assets. The assets are located in the Alberta Deep Basin and the NEBC Montney Complex.
The deal is worth $1.369 billion. This is before customary adjustments. A cash consideration of $1.0 billion and the remainder in Tourmaline common shares is included in the deal.
The cash portion of the deal purchase price will be funded through what the company says is committed concurrent equity financings totalling $739.4 million as well as Tourmaline’s existing credit facilities.
The company says this deal is a big part of the company not becoming just one of the biggest low-cost and profitable natural and liquid gas producers in Canada, but in North America.
In an article by the BOE Report, it included an outline for what the assets will be used for.
“The Deep Basin Assets consist of 382 gross sections (154 of which are joint working interest with Tourmaline) and current low-decline production of approximately 18,650 boepd. Tourmaline will also acquire Shell Canada’s infrastructure consisting of three 100%-operated gas plants (estimated processing capacity of 200-225 mmcfpd) and 719 km of pipelines, providing Tourmaline with total operated processing capacity of over 1.0 bcf/day in the Alberta Deep Basin. The Company plans to add approximately 100 mmcfpd of new production in 2017 from the Deep Basin Assets through the drilling of 31 horizontal wells and fill the acquired infrastructure capacity.
The Montney Assets in BC consist of a large, contiguous 100% working interest 101 section land block in an area with 300 metres of Montney gross pay, four separate lobes to develop, and liquid content ranging from 10-80 bbls/mmcf. Current production is approximately 6,200 boepd from 25 existing horizontal wells that have delineated the land block. Estimated 2P reserves are 371 mmboe with an average liquid yield of approximately 30 bbl/mmcf (GLJ Montney Report) with only 375 locations included in the GLJ Montney Report out of an internally estimated 1,647 locations. Tourmaline plans to drill 13 horizontals on the Montney Assets in 2017 and 54 horizontals in 2018 in conjunction with Company infrastructure construction. The natural gas is sweet and the strong liquid content will provide a significant uplift to Tourmaline’s overall condensate production levels. Tourmaline currently drills the lowest-cost completed gas wells in the entire Montney play; transferring this technology to these Montney Assets is expected to yield top-decile play economics/gas supply costs.”
The Company is expecting in 2017, a production of approximately 250,000-260,000 boepd, and 2018 production levels of 310,000-320,000 boepd.
Original Story: http://boereport.com/2016/10/20/tourmaline-oil-corp-announces-strategic-asset-acquisition-in-the-alberta-deep-basin-and-nebc-montney-complex-739-4-million-equity-financings-and-increased-2017-guidance/