Eurogas to buy Talisman's Ontario/Erie assets

Eurogas Corp., Toronto, plans to acquire Ontario oil and gas assets from an undisclosed seller for $131 million. Closing is set for May 27.

By OGJ editors
HOUSTON, Apr. 7
-- Eurogas Corp., Toronto, plans to acquire Ontario oil and gas assets from an undisclosed seller for $131 million. Closing is set for May 27.

Eurogas described the assets—which appear to be those of Talisman Energy Inc.—as “the largest accumulation of oil and natural gas assets in Ontario.” Talisman separately announced agreements to sell $1.9 billion (Can.) in assets in Canada to multiple buyers, including the Ontario properties.

The assets, onshore and offshore oil and gas properties in and around Lake Erie, will provide operating cash flow of at least $2 million/month at current low natural gas price levels. The assets include growth potential from numerous development drilling locations, recompletions, and optimizing existing infrastructure.

Eurogas will operate 100% of the acquired production with an average 95% working interest in 65,000 acres onshore and 65% in 902,000 acres offshore.

The properties produce 790 b/d of 42° gravity oil and condensate and 11.1 MMcfd of gas, and reserves are estimated at 2 million bbl of oil and 66 bcf of gas.

Eurogas will also acquire 65% ownership in a fleet of offshore drilling and completion vessels, 65% ownership in three gas processing plants and three compressor stations, all located onshore, 100% ownership in four oil tank batteries onshore, ownership of 13,400 line-km of 2D seismic and 317 sq km of 3D seismic, and potential for underground gas storage field development.

Eurogas, as part of the transaction, is obligated to extend an offer under the same terms and conditions to the holder of the remaining 35% interest in the offshore assets. There is no assurance the holder would agree to sell.

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