Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )
Current BIR:CA Stock Info

Birchcliff Energy presents at EnerCom’s The Oil & Gas Conference®

During Birchcliff’s breakout sessions, management was asked the following questions:

  • Post Gordondale acquisition what price are you expecting in order to fund development from cash flow?
  • Where do you expect prices to be in the future?
  • What level of debt to cash flow are you comfortable?
  • Why are completion sand volumes going up? How do you compare to the competitors who use more sand?
  • Are you going to sign up for mainline capacity? Do you think it will happen through CAP?
  • Have you assessed the fairness of current transportation pricing?
  • Encana had 100 locations on Gordondale when they owned the asset and Birchcliff lists 900 drilling locations. How do you reconcile this difference?

You can listen to Birchcliff’s presentation by clicking here.

For the company’s first quarter results, click here.

Birchcliff Energy (ticker: BIR) is a Canadian oil and natural gas exploration and production company headquartered in Calgary, Alberta, operating in the Montney/Doig Natural Gas Resource Play and Worsley Charlie Lake Light Oil Resource Play in northern Alberta. The company has increased production over the last few years from 26 Mboe/d in 2013 to 39 Mboe/d in 2015. Birchcliff’s Q1 production was 42 Mboe/d prior to the C$625M acquisition completed July 28, 2016. The company has a said they are focused on these two established plays.

The company is utilizing horizontal drilling and fracturing in the shale plays, and they looking to further reduce costs by utilizing pad drilling. The company, in its Q1 release, explains that the cost savings in pad drilling comes primarily from decreased capital costs.

Strategic Acquisition

On July 28, 2016 Birchcliff closed on a significant acquisition of 100% of Encana’s interest in the Gordondale area. The transaction is expected to increase daily production to approximately 65 mboe/d (77% gas). This represents an anticipated 55% increase in daily production. The mix of this production will also change with a 12.5% decline in the reliance of natural gas in the overall company’s production mix. Increasing production of oil and NGLs will reduce the risk from concentration in a single commodity. The acquisition will increase proved developed reserves by 54MMboe. The total 2P reserves will be approximately 764MMboe.

The acquisition will give the company a reported 251,950 net acres in its target area with 42% of the acreage classified as developed. Birchcliff anticipates more efficient future development of the area with better plans for future development in the area that will establish best practices for accessing the formation. The substantial continuous, high working interest acreage accomplished in this transaction will better allow for this type of long term planning.

The transaction was funded through a private placement of shares by the company through underwriters and The Schulich Foundation, controlled by billionaire investor, Seymour Schulich. The offering raised aggregate gross proceeds of C$691M. The shares were sold through the private offering for $6.25/share and would convert to underlying shares as of the closing date. The subscription receipts for the private placement were delivered to the Toronto Stock Exchange (“TSX”) on July 28, 2016, and the underlying shares began trading normally on Friday, July 29.

Borrowing Base Redetermination

July 28, 2016 Birchcliff also announced a 27% increase in its credit facility from C$750M to C$950M. This is C$900M syndicated credit facility and C$50M revolving facility for working capital. The borrowing based will not be redetermined in November 2016 as previously planned.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.