Current MEI:CA Stock Info

Manitok acquires 1.8 MBOEPD of producing assets

Calgary-based Manitok Energy (ticker: MEI) announced today that the company closed its previously announced acquisition of certain assets of a private Alberta-based oil and gas company.

Manitok believes the assets will produce an average of approximately 1,750 BOEPD (34% light oil and NGLs) in November, and are comprised of mature Cardium light oil and natural gas assets in the Willisden Green area of west central Alberta. The total consideration for the acquisition is $13.5 million before closing adjustments, payable in a combination of cash and units.

The units will have a deemed value of $100 per each unit, with total unit consideration to be issued to the vender up to $4.5 million in units. The remainder of the $13.5 million will be paid in cash by MEI.

The company expects that the completion of the acquisition will push its current production levels to approximately 6.5 MBOEPD (38% light oil and NGLs) which is the highest level of production achieved by Manitok to date, according to a release from the company Monday. The anticipated production from the assets purchased in Alberta will are expected in increase the company’s production by 37% in November.

The acquisition has the following approximate deal metrics:

Reserves Summary(1) Volume NPV10
December 31, 2015 (mboe) ($mm)
Proved Developed Producing 4.1 $33.4
Total Proved 7.7 $47.4
Total Proved Plus Probable 10.8 $77.9
Valuation Multiples
Transaction Value / Production ($/boe/d) $6,515
Transaction Value / Operating Netback 3.0x
Transaction Value / PDP Reserves ($/boe) $3.30
Transaction Value / 1P Reserves ($/boe) $1.74
Transaction Value / 2P Reserves ($/boe) $1.25
Transaction Value / PDP NPV10 0.4x
Transaction Value / 1P NPV10 0.3x
Transaction Value / 2P NPV10 0.2x
  • Purchase price of 3.0 times the estimated operating netback for the 12 months ended June 30, 2016 attributable to the assets.
  1. Based upon combined independent engineering evaluations prepared by McDaniel & Associates Consultants Ltd. and Sproule Associates Ltd. effective December 31, 2015 using their respective December 31, 2015 price forecasts (Acquisition Reserves Report). The Acquisition Reserves Report evaluated the oil, NGL and natural gas reserves attributable to the assets 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 acquired assets

The acquisition includes approximately 90,000 acres (55,800 net) of undeveloped land, and facilities in Willisden Green which include an emulsion handling facility with capacity of approximately 2.5 MBOPD and a natural gas compressor station with capacity of 11 MMcf/d. The oil facility is pipeline-connected to a terminal owned and operated by Pembina Pipeline Corporation and is only 70 kilometers east of Manitok’s Stolberg assets. The corporation anticipates potential transportation cost savings and oil blending synergies between the Stolberg and Willisden Green assets.

In addition, Manitok has recently finished drilling three Lithic Glauconitic (LG) wells in southern Alberta. Two wells were drilled in Manitok’s Carseland field immediately offsetting the first two successful LG wells drilled by Manitok in 2014 and one well was drilled in the Wayne field, testing a new trend which has similarities to the trend at Carseland. The first Carseland well has been completed, with the other two well completions to follow shortly. Production testing results will be released over the course of the next three weeks as operations are completed.

Manitok raises $20 million along with acquisition

Along with the news that Manitok planned to purchase the mature Cardium assets, MEI announced that it filed a preliminary prospectus with a marketed underwritten offering of 200,000 units of Manitok for total aggregate proceeds of $20.0 million.

The units will consist of a $100 principal amount senior secured note due 2021 with an interest rate of 10.5% per annum and common share purchase warrants in an amount to be determined upon the completion of marketing of the deal. Interest on the notes will be payable quarterly in arrears, according to the company.

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