Legacy Oil + Gas has added to its resource light oil holdings in its core Saskatchewan and Alberta areas and taken over privately held Villanova Oil.
The transactions will boost its targeted 2013 production to 19,000 barrels of oil equivalent per day (90 percent oil and natural gas liquids) and an exit rate for the year of 21,500 boe per day. Capital spending for the year is now pegged at C$310 million.
The acquisitions in southeastern Saskatchewan and the Turner Valley area of southern Alberta were negotiated with an unidentified senior producer, believed by industry sources to be Enerplus, for C$57.5 million, plus Legacy’s minor working interest in Saskatchewan’s Freda Lake unit.
Enerplus owns a 99.86 percent working interest in Freda Lake along with the Turner Valley assets.
The producing properties are predominantly operated with a high working interest and come with three-dimensional seismic coverage and control of key infrastructure.
The Villanova deal for C$21.3 million in cash and 13.9 million Legacy common shares at a deemed price of C$5.48 per share will also see Legacy assume Villanova’s C$29.8 million of net debt, raising the overall value to C$127.3 million.
Several adjacent properties
Several of Villanova’s properties are located adjacent to Legacy’s operated assets. The deal also includes 11,520 gross acres prospective for Midale, Bakken and Three Forks light oil adjacent to Legacy’s Pinto property, allowing Legacy to consolidate interests in the pay while adding bolt-on production and lands in its other southeast Saskatchewan conventional production areas of Alameda, Manor and Carnduff/Souris Flat.
The combined light oil assets and the Villanova acquisition adds several sections in Legacy’s Taylorton and Pinto core areas and 32,522 net acres of undeveloped land.
Current production from the properties is 1,775 boe per day (98 percent light oil), while proved plus probable reserves are estimated at 9.1 million boe, with a proved plus probable reserve life index of 14 years.
The combined transactions are calculated at C$99,363 per boe of long reserve life, high netback production, with proved plus probable reserves costing C$19.46 per boe.
The acquisitions offer 194 gross and 82.6 net development drilling locations and an estimated operating netback of C$60 per boe.
First quarter drilling
In the first quarter of 2013, Legacy drilled 43 gross (34.6 net) wells with a 100 percent success rate, including 14 gross (11 net) Spearfish horizontal wells in Legacy’s Pierson and Bottineau county areas in southwest Manitoba and North Dakota. Legacy said it continues to have success in Steelman, with seven wells brought on production in the quarter, with four of the wells yielding 20-day initial production rates of 200 boe per day per well, while the other three have demonstrated un-optimized initial rates of 125-550 boe per day.
At Turner Valley, Legacy said it has continued to evolve drilling and completion practices to optimize both production rates and capital costs.
Drilling to date has targeted infill locations testing areas of varying water cut, reservoir pressure, proximity to water injection and three different stratigraphic horizons.
The company disclosed that its most recent well at Candor No. 2 was brought on production recently and has so far produced in excess of 300 boe per day with a 25 percent water cut.
It has also completed a 35 square kilometer 3-D seismic survey over the southern half of the Turner Valley pool, which extends into the Southern Alberta Bakken.
Source: Petroleum News