ugg australia sheepskin care kit Paramount and Trilogy Energy Corp
CALGARY, July 6, 2017 /CNW/ Paramount Resources Ltd. (TSX: POU) (“Paramount” or the “Company”) is pleased to announce that it has entered into an agreement with certain subsidiaries of Apache Corporation to acquire Apache Canada Ltd. (“Apache Canada”) for $459.5 million, plus working capital and other monetary adjustments (the “Apache Canada Acquisition”). Paramount plans to fund the Apache Canada Acquisition with cash on hand and no debt will be assumed.
Paramount has also entered into an agreement with Trilogy Energy Corp. (“Trilogy”) to merge by way of an arrangement under the Business Corporations Act (Alberta), pursuant to which Paramount would acquire all of the common shares and non voting shares of Trilogy not already owned by Paramount in exchange for Class A common shares of Paramount on the basis of one Paramount share for every 3.75 Trilogy shares (the “Merger”).
These strategic transactions are the next steps in Paramount’s transformation following the sale of the Company’s Musreau deep cut gas processing plant and properties in 2016 and the repayment of all debt then outstanding. The Company is redeploying its cash on hand and immediately increasing its production, cash flows, reserves and landholdings.
Paramount, upon acquiring Apache Canada and merging with Trilogy, will become a Montney, Duvernay and Deep Basin focused intermediate exploration and production company with the financial strength to accelerate the development of a portfolio of top tier resource plays, unlocking the value of the underlying resources. The integration of the three companies will generate operational synergies, optimize cost structures, offer financial flexibility and provide economies of scale. Paramount’s diversified production base will be capable of delivering repeatable, low risk growth and generating free cash flow in a variety of price environments.
Once completed, the Apache Canada Acquisition and the Merger will result in Paramount having:
Combined fourth quarter 2017 production expected to exceed 90,000 Boe/d, including approximately 35 percent liquids, and proved plus probable reserves of 600 MMBoe, based on independent reserves evaluations prepared by McDaniel Associates Consultants Ltd. (“McDaniel”) effective as of June 1, 2017;
A total land position of approximately 2.7 million net acres with a number of top tier Montney and Duvernay resource development plays which will provide the Company with considerable capital allocation flexibility;
A strong balance sheet and materially enhanced cash flow base;
Montney acreage of approximately 372,000 net acres, with near term production growth focused at Karr and a new turn key resource play at Wapiti which is anticipated to add material new production in mid 2019;
Duvernay acreage of approximately 223,000 net acres, with near term growth planned for the Kaybob Duvernay; and
176,000 net acres of fee simple lands in southern Alberta and additional minor properties, all of which may be monetized in whole or in part.
“These transactions represent Paramount’s next significant resource capture, building on the transformation of the Company we initiated in 2016. We have replaced more than the liquids rich Montney lands and reserves we sold in 2016 and acquired a suite of top tier development opportunities,” said Jim Riddell, Paramount’s President and Chief Executive Officer.
“We believe the 46,000 Montney acres we are acquiring at Wapiti are a continuation of Paramount’s liquids rich resource play at Karr, where our drilling and completion programs have been delivering record results for Paramount. Closing of the Apache Canada Acquisition is expected to occur in August 2017, subject to the receipt of regulatory approvals and other customary closing conditions. The Merger is conditional upon, among other things, the completion of the Apache Canada Acquisition and is targeted for completion in September 2017.
The map below outlines the location of Apache Canada’s and Trilogy’s lands in relation to Paramount’s lands:
Paramount’s independent reserves evaluator, McDaniel, updated the Company’s reserves evaluation to June 1, 2017. The Company’s proved plus probable reserves increased 27 percent to 146 MMBoe compared to 115 MMBoe as of December 31, 2016. The increase in reserves is primarily due to the performance of new wells brought on production at the Karr property in 2017.
The reserves of Apache Canada and Trilogy have also been evaluated by McDaniel as of June 1, 2017. based international oil and gas company. Highlights of the Apache Canada Acquisition include:
Paramount is acquiring future Montney and Duvernay resource play opportunities in the Alberta Deep Basin, with production currently concentrated at Kaybob and Central Alberta;
The acquisition of a turn key Montney resource play at Wapiti, northwest of Paramount’s Karr project, and 150 MMcf/d of gathering and processing capacity which a midstream owner/operator has committed to construct by mid 2019 and to which Paramount will have priority access with a take or pay commitment for a portion of the capacity;
The addition of approximately 46,000 acres of undeveloped acreage at Wapiti with multiple intervals in the Montney formation which the Company plans to develop utilizing the well completion designs that have been successfully implemented by the Company at Karr;
An increase in the Company’s total acreage by approximately 1.6 million net acres, including highly prospective Montney and Duvernay undeveloped acreage of approximately 185,000 and 45,000 net acres, respectively; and
The acquisition of approximately 176,000 net acres of fee simple lands in Central Alberta.
Apache Canada has recently sold its Midale and House Mountain properties and has entered into an agreement with another party to sell its Provost properties. These three properties are not part of the Apache Canada Acquisition.
Apache Canada’s Wapiti area includes approximately 46,000 (45,800 net) acres of Montney rights in the core of the over pressured, liquids rich fairway in the Alberta Deep Basin. Paramount is ready to commence a large scale development of these resources and add new production in mid 2019 when a new third party processing facility is completed (the “Wapiti Montney Project”). The Company plans to develop Wapiti utilizing the well completion designs that have been successfully executed at Paramount’s Karr development. The Company expects Wapiti Montney Project natural gas volumes to increase to approximately 150 MMcf/d by 2021 as development proceeds and multi well pads are completed and brought on production.
The reserves evaluation for Apache Canada prepared by McDaniel includes 96 net undeveloped well locations for the Wapiti Montney Project, representing the development of approximately only 20 percent of the total Wapiti lands.
A midstream arrangement with a third party owner/operator is in place for the turn key Wapiti Montney Project. The first phase, scheduled for startup in mid 2019, includes 150 MMcf/d of sour gas processing capacity with acid gas injection capabilities and 25,000 Bbl/d of condensate processing capacity, as well as a gathering pipeline system and field compressor stations. Paramount will have priority access to the full 150 MMcf/d of capacity, with a take or pay commitment for a portion thereof. This gathering and processing arrangement allows Paramount to focus on drilling and completing wells while a third party midstream operator concentrates on building and operating the infrastructure.
Firm service natural gas transportation is also in place for the Wapiti Montney Project, with 50 MMcf/d of firm service capacity available in mid 2019, which can be increased to 130 MMcf/d by 2020.