Petrobank Energy and Resources Ltd. is pleased to announce that we have concluded the acquisition of Baytex Energy Ltd.'s ("Baytex") and Shell Canada Ltd.'s ("Shell") respective 50% interests in the Kerrobert and Dawson projects. The total net cash paid for these transactions is approximately $15 million, before closing adjustments. These acquisitions effectively consolidate and increase our Canadian heavy oil lands and add a combined additional 41 MMbbls of conventional heavy Exploitable Oil-in-Place(1)("EOIP") at Dawson and Kerrobert as estimated by McDaniel & Associates Consultants Ltd. at December 31, 2009. We have now established full development discretion on all our domestic projects.
Petrobank has acquired
Baytex's 50% working interest in the Phase-1 project lands and wells.
Baytex retains a gross overriding royalty on their working interest,
commencing 12 months after first production from the Kerrobert expansion
project. This agreement carves out the Kerrobert expansion from the
existing Joint Venture Agreement with Baytex, which remains in place for
the Phase-2 lands, discretionary lands, and the Area of Mutual
Interest. With this transaction we have 100% working interest in 38
MMbbls of conventional heavy EOIP.
Petrobank has commenced the
full development of the Kerrobert Phase-1 expansion. Regulatory approval
was received on August 6, 2010 and we plan to spud our first expansion
well before October 31, 2010. The Phase-1 expansion includes a further
10 THAI(TM)well-pairs and surface facilities. We are targeting the
start-up pre-heat ignition cycle (PHIC) during Q1 2011. Air injection
and production are now expected to begin during Q2 2011.
has acquired Shell's 50% working interest in the Dawson project and a
100% working interest in an additional 27 sections (6,912 hectares) of
land prospective for Bluesky heavy oil resource adjacent to the Dawson
project. With this transaction we have 100% working interest in 44
MMbbls of conventional heavy EOIP. Petrobank will proceed with the two
well Dawson project immediately following regulatory approval and we are
targeting a minimum of 10 additional well-pairs as part of a near term
expansion of the Dawson project.
Petrobank has acquired the
interests in Kerrobert and Dawson with cash on hand. We expect to fund
the capital expenditures related to the acquired 50% working interest
from cash flow from operations and our undrawn credit facility.
Petrobank is in discussions to restructure and significantly increase
our credit facility amount to better reflect our asset values and to
position Petrobank to pursue further opportunities for growth.
part of our strategy to acquire additional heavy oil resources,
Petrobank is pleased to finalize these strategic acquisitions to
increase our domestic portfolio to 81 MMbbls of conventional heavy EOIP,
expanding our land position by 27 sections, and achieving 100% control
of two key THAI(TM)projects. In addition to these assets Petrobank also
owns 100% in 62 sections of oil sands leases containing proved and
probable reserves plus best estimate contingent resources of 669.1
MMbbls. We are now able to aggressively exploit our sizeable domestic
resource base with our ground breaking THAI(TM)technology.