MANITOK ENERGY INC. ANNOUNCES THE EXECUTION OF ASSET PURCHASE OF PRODUCTION AND FLUID PROCESSING FACILITY IN SOUTHERN ALBERTA
MANITOK ENERGY INC. IS PLEASED TO ANNOUNCE THE EXECUTION OF ASSET PURCHASE AGREEMENT FOR THE ACQUISITION OF 1,800 BOE/D OF PRODUCTION AND A 25,000 BBLS/D FLUID PROCESSING FACILITY IN SOUTHERN ALBERTA
May 1, 2015, Calgary, Alberta– Manitok Energy Inc. (the “Corporation” or “Manitok“) (TSX-V: MEI) is pleased to announce that it has entered into an asset purchase agreement with a public Alberta based resource company for the acquisition of approximately 1,800 boe/d of production (66% oil and liquids) and a related 25,000 bbls/day fluid processing facility in the Wayne area of southeast Alberta (the “Wayne Assets“) for total cash consideration of $61.5 million prior to transaction costs and customary closing adjustments (the “Proposed Acquisition“). Closing of the Proposed Acquisition is anticipated to occur on or about June 1, 2015. Manitok anticipates financing the Proposed Acquisition with approximately $47.0 million primarily from a production volume royalty of approximately 6% of Stolberg production through a private royalty income trust company and up to $20.0 million of infrastructure based facility financing.
The Wayne Assets are just 14 km due east of Manitok’s Entice property which provides significant synergies in regards to Manitok’s growth strategy, future facility capital requirements and field operations. There are 67,712 acres (99.5% average working interest) of total land with full 3D seismic coverage. The lands consist of freehold mineral rights, held by a public royalty company with an established relationship with Manitok.
Based on a significant amount of well control, the reservoir characteristics of the identified Lithic Glauconitic (“Glauc“) and Basal Quartz (“BQ“) prospective drilling opportunities associated with the Wayne Assets are similar to the reservoir characteristics in Manitok’s Carseland area. The addition of the Wayne Assets will provide scalable horizontal well development where there is significant well control and approximately 1,400 km 2of 3D seismic.
Manitok will add approximately 75 BQ and 51 Glauc horizontal drilling locations to its inventory. Within that total, there are a subset of 30 Glauc and 21 BQ horizontal drilling locations within an 8 km radius of the facility that could be quickly tied into the facility through existing in frastructure with limited cost. Combined with Entice, Manitok will have approximately 137 BQ and 159 Glauc horizontal drilling locations in its core area.
The Wayne facility will significantly reduce Manitok’s reliance on third party facilities and transportation systems. The facility is capable of processing 25,000 bbls/d of fluid and is directly tied into the Inter Pipeline Fund (“IPF“) Central Alberta Pipeline with 6,600 bbls/d of oil capacity which is expandable. It can handle 26,000 bbls/d of water disposal and has acid gas disposal capacity of 4.4 MMcf/d which can be expanded to 15 MMcf/d.
The Proposed Acquisition has the following characteristics
|Production (1)||1,800 boe/d (66% oil and liquids)|
|Total Proved Reserves (all PDP) (2)||2,710 mboe|
|Total Proved plus Probable Reserves (2)||3,577 mbe|
|Undeveloped Land||49,728 acres|
(1) Based on June 2015 expected production, estimated by management of Manitok.
(2) Based upon an independent engineering evaluation prepared by McDaniel & Associates Consultants Ltd. effective December 31, 2014using GLJ Petroleum Consultants December 31, 2014 price forecast (“McDaniel Report”). The McDaniel Report evaluated the oil,NGL and natural gas reserves attributable to the assets. The McDaniel Report is an excerpt from an area report and has been prepared in accordance with Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.
The 126 lower Mannville horizontal drilling locations identified by Manitok on the associated lands are not booked in the McDaniel Report.
The acquisition metrics are presented net of the undeveloped land value.
|Net purchase price of reserves (1)||$55.5 million|
|Current production (2)||$30,833/boe/d|
|Total Proved Reserves (3)||$20.48/boe|
|Total Proved plus Probable Reserves (3)||$15.52/boe|
(1) The net purchase price assumes a value of $6.0 million for undeveloped land.
(2) Based on June 2015 expected production, estimated by management of Manitok.
(3) Based on the McDaniel Report.
Integral Capital Markets and National Bank Financial Inc. acted as joint financial advisors to Manitok on the Proposed Acquisition and financing.
Manitok is a public oil and gas exploration and development company focusing on conventional oil and gas reservoirs in the Canadian foothills and southeast Alberta. The Corporation will utilize its experience to develop the untapped conventional oil and liquids-rich natural gas pools in both the foothills and southeast Alberta areas of the Western Canadian Sedimentary Basin.
For further information view our website at www.manitokenergy.com or contact:
Manitok Energy Inc.
Massimo M. Geremia, President & Chief Executive Officer
This press release contains forward-looking statements. More particularly, this press release contains statements concerning the terms and conditions of the Proposed Acquisition, anticipated timing of closing of the Proposed Acquisition, anticipated method of financing of the Proposed Acquisition and the anticipated benefits of the Proposed Acquisition and the anticipat ed development and growth potential of Manitok’s properties following the completion of the Proposed Acquisition.
The forward-looking statements in this press release are based on certain key expectations and assumptions made
by Manitok, including expectations and assumptions concerning the success of future drilling and development
activities, the performance of existing wells, the performance of new wells, the successful application of technology, prevailing weather conditions, commodity prices, royalty regimes and exchange rates and the availability of capital, labour and services.
Although Manitok believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Manitok can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), uncertainty as to the availability of labour and services, availability of financing at commercially reasonable terms, commodity price and exchange rate fluctuations, unexpected adverse weather conditions, general business, economic, competitive, political and social uncertainties, capital market conditions and market prices for securities and changes to existing laws and regulations. Certain of these risks are set out in more detail in Manitok’s current Annual Information Form, which is available on Manitok’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR“) website at www.sedar.com and on the Corporation’s website at www.manitokenergy.com.
Forward-looking statements are based on estimates and opinions of management of Manitok at the time the statements are presented. Manitok may, as considered necessary in the circumstances, update or revise such forward-looking statements, whether as a result of new information, future events or otherwise, but Manitok undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.
Barrels Of Oil Equivalent
The term barrels of oil equivalent (“boe“) may be misleading, particularly if used in isolation. Per boe amounts have been calculated using a conversion ratio of six thousand cubic feet (6 mcf) of natural gas to one barrel (1 bbl) of crude oil. The boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.