By OGJ editors
HOUSTON, Oct. 18 -- Canetic Resources Trust, Calgary, said it signed a preacquisition agreement under which it will make an offer to acquire Titan Exploration Ltd., Calgary, for $116 million.
Titan's board agreed unanimously to support the offer. Materials were to be filed and provided to Titan shareholders by mid-November.
Canetic said it will acquire production of more than 1,800 b/d of oil equivalent, 63% oil, and a Canetic-estimated 7.3 million boe of proved and probable reserves.
Canetic also will assume a dominant position in a strategic Saskatchewan trend. The acquisition includes more than 49,000 gross acres in the Leitchville area of Southwest Saskatchewan near Canetic's existing 45,100 gross acres in the Jurassic Lower Shaunavon trend, where Titan produces more than 900 boed.
Canetic said the Leitchville area is an emerging play with great development and long-term reserve addition potential.
The acquisition will expand Canetic's position in the trend by more than one-third to 300 gross drilling locations.
The Lower Shaunavon trend contains large reservoirs with pay zones 4-16 m thick, relatively low permeability, and 22° gravity oil.
Development has been focused on the Upper Shaunavon for several years due to difficulty in producing from the Lower Shaunavon, Canetic said, but improvements the past year in drilling and completion techniques similar to those in the emerging Bakken play "have proved key to the potential 'unlocking' of significant reserves and production in the Lower Shaunavon trend," Canetic said.
Canetic contemplates drilling four horizontal wells/sq mile at Leitchville.
The rest of Titan's production is in northern Alberta and British Columbia.
