Spartan Energy Corp. has agreed to acquire all of the southeast Saskatchewan assets belonging to fellow Calgary firm ARC Resources Ltd. for $700 million in cash.
The purchase covers 98,000 net acres and 7,500 boe/d in third-quarter production, with 38 million boe of proved plus probable reserves at yearend 2015. The deal, which increases Spartan’s focus on conventional light oil development in southeast Saskatchewan, is effective Oct. 1 and expected to close on or about Dec. 8.
Upon the deal’s completion, Spartan will control 376,000 net acres of land in southeast Saskatchewan with production of 20,000 boe/d, of which 93% is oil and liquids. Spartan says the assets are capable of delivering 10-15% production growth within cash flow at West Texas Intermediate prices of $40/bbl.
The firm says the assets are characterized by a low-base decline of 12% and include 404 drilling locations, along with recompletions and waterflood expansion across a land base spanning the conventional Mississippian fairway.
Spartan is also acquiring working interest ownership in the Weyburn and Midale carbon dioxide enhanced oil recovery projects, interests in 30 light oil batteries, 99% interest in the Lougheed sour gas plant, an extensive network of field gathering infrastructure supporting both current volumes and anticipated future growth, and ownership of a proprietary 2D and 3D seismic database, the firm adds.
The EOR projects have a decline rate of 4%, with material upside through continued expansion of injection patterns and technology improvements.
Providing the seller’s perspective, Myron Stadnyk, ARC’s president and chief executive officer, said, “This strategic transaction will allow ARC to continue to create value for shareholders by developing our premium-quality Montney asset base.” With the Spartan sale, ARC has now divested 21,500 boe/d in production since 2009.
ARC says it’s “highly confident that the reserves and production divested will be more than replaced over time” as it develops its Montney assets in Dawson, Parkland-Tower, Sunrise, Pouce Coupe, Attachie, Septimus, Blueberry, and Sundown.
The firm also says it will continue to invest in its core Alberta properties at Ante Creek, representing conventional Montney light oil and natural gas; and Pembina, representing Cardium light oil.
Contact Matt Zborowski at [email protected].
