Toscana Energy Announces Acquisition of Oil Assets
CALGARY, Alberta, Nov. 25, 2015 (GLOBE NEWSWIRE) -- Toscana Energy Income Corporation ("Toscana Energy" or the "Corporation") (TSX:TEI) is pleased to announce that it has entered into a Purchase and Sale Agreement to acquire assets (the "Assets") that produce, on average, 300 barrels a day of long life operated light oil production in southern Alberta, for $15,000,000 in cash. This acquisition represents the fourth purchase of large resource in place oil reserves this year adding to Toscana Energy's portfolio of gross overriding royalty (GORR) interests and liquid rich natural gas assets.
The following are highlights of the Assets that are being acquired by Toscana Energy:
Large oil in place with enhanced oil recovery (EOR) underway
A Reserve Life Index of approximately 12 years*
Run rate cash flow of 4.3 times
Flowing barrel metric of $50,000*
Proved acquisition price of $15.67 per barrel*
Proved plus Probable acquisition price of $11.29 per barrel*
A recycle ratio on a proved plus probable basis of 2.48 times based on run rate cash flow
Closing of this transaction is subject to customary closing conditions as well as an increase in Toscana Energy's credit facilities which is currently underway and expected to occur prior to closing. Closing of this transaction is anticipated by year end and will have an effective date of October 1, 2015.
*Reserves values based on an independent engineering report prepared by a qualified reserves evaluator dated effective December 31, 2014.
Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements regarding the Assets production levels, projected capital expenditures, projected operating expenses and general and administrative costs, and sufficiency of resources to fund operations. This information also includes information regarding the acquisition of the Assets, expectations and assumptions concerning the increase in the Corporation's credit facilities, completion of the acquisition and the benefits to be acquired therefrom including drilling, exploration and production potential, operating costs and other economics. For the purposes of this press release, the Corporation has assumed that the information received from the Assets seller and other sources regarding production on the property is accurate, and that the Corporation's estimates of prospective drilling locations, synergistic savings and potential production results are reasonable. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties, including failure to obtain additional credit, unexpected declines in production, expenses or costs associated with the acquisition beyond what is anticipated, unforeseen geophysical or geological structures, failing to complete the acquisition on terms that are acceptable to the Corporation or at all. Forward-looking statements are necessarily based on a number of assumptions and judgments, including but not limited to, assumptions relating to the outlook for commodity and capital markets, the success of future resource evaluation and development activities, the performance of producing wells and reservoirs, well development and operating performance, general economic conditions, weather, and the regulatory and legal environment. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in the Corporation's Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; weather conditions and access to properties; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; timing and rig availability; outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; uncertainties associated with the regulatory review and approval process in respect to projects; risks associated with the application of early stage technologies; risks associated with oil and gas operations and other factors, many of which are beyond the control of Toscana Energy. There is no representation by the Corporation that actual results achieved during the forecast period will be the same in whole or in part as those forecasted. Except as may be required by applicable securities laws of the Toronto Stock Exchange, Toscana Energy assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
The reserves information that can be derived from the information in this press release are estimates only. In general, estimates of oil and natural gas reserves are based upon a number of variable factors and assumptions, such as production rates, ultimate reserves recovery, timing and amount of capital expenditures, ability to transport production, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially from actual results. For those reasons, estimates of the oil and natural gas reserves attributable to any particular group of properties, as well as the classification of such reserves prepared by different engineers (or by the same engineers at different times) may vary. The actual reserves of the Corporation may be greater or less than those calculated. In addition, the Corporation's actual production, revenues, development and operating expenditures will vary from estimates thereof and such variations could be material.
Oil and gas Metrics
This press release contains metrics commonly used in the oil and natural gas industry, such as reserves life index, run rate cash flow, flowing barrel metric, proved acquisition price, proved plus probable acquisition price and recycle ratio. These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons. Reserves life index is calculated by dividing year-end estimates of proved plus probable reserves by expected annual production and may be used to determine how long a well or property will continue to produce. Run rate cash flow reflects the previous 12 months average net operating income and may be used as a measure of the value of the acquisition as against cash flow models for the assets. The flowing barrel metric is calculated by dividing the purchase price for the asset by the year-end production and is used to determine the amount that has been paid for each barrel of production. The proved acquisition price is calculated by dividing the purchase price by the number of estimated barrels of oil of proved reserves and indicates the price paid for each estimated barrel of proved reserves. The proved plus probable acquisition price is calculated by dividing the purchase price by the number of estimated barrels of oil of proved plus probable reserves and indicates the price paid for each estimated barrel of proved and probable reserves. The recycle ratio is calculated by dividing the average net operating income for the previous 12 months by the number of estimate barrels of proved plus probable reserves and may be used as a measure of profitability for a producer. Management uses these oil and gas metrics for its own performance measurement and to provide stakeholders with measures to compare the Corporation's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this press release, should not be relied upon for investment or other purposes.
About Toscana Energy Income Corporation
Toscana Energy is a conventional oil and gas producer with the mandate to acquire high quality, long life oil and gas assets including royalties, non-operated working interests and unitized production for yield and capital appreciation. Toscana Energy is managed by Sprott Toscana through Toscana Energy Corporation. Sprott Toscana is a member of the Sprott Group of Companies.
Hedging programs that E&Ps have in place in 2016 vary considerably. The chart below shows the range of oil and gas production for several E&Ps covered by hedging contracts. Pioneer Natural Resources (ticker: PXD) and Cimarex Energy (ticker: XEC) have hedged the largest portions of their remaining production at 85/75 and 80/90 percent, respectively, for oil and gas. This chart[Read More…]
Oil & Gas 360® c/o EnerCom, Inc.
800 18th Street
Denver, CO 80202
Advertise on OAG360
OAG360 has multiple advertising opportunities. Reach your investors/buyers by advertising on the website, eMail campaigns, webcasts and videos.