CALGARY, Feb. 25, 2015 /CNW/ - Marquee Energy Ltd.
("Marquee" or the "Company") (TSXV: MQL) is pleased to announce
that it has entered into an agreement to acquire light oil assets
complementary to the Company's existing core asset base and
infrastructure at Michichi. The strategic acquisition (the
"Acquisition") includes approximately 330 boe/d (79% oil &
NGLs) and 34 net sections of land containing Banff rights that are contiguous with
Marquee's position in the area. Consideration is approximately
$16.5 million, including $14.5 million cash and the conveyance and
exchange of certain non-core gas assets valued at approximately
$2 million (subject to customary
closing adjustments).
Marquee will initially fund the Acquisition through a
combination of working capital, bank debt, and with the proceeds of
a recently closed non-core asset disposition. The Transaction is
effective as of February 1, 2015 and
is expected to close on or before March 30,
2015. Completion of the Acquisition is subject to standard
regulatory approvals.
Acquisition Summary:
Net Consideration
(1) :
|
$14.5 million cash
and MQL gas asset valued at $2 million (120 boed, 25%
NGLs)
|
Current
Production:
|
~330 boe/d (79% oil
& NGLs)
|
Land:
|
30 net undeveloped
sections
|
Proved
Reserves:
|
2,403 Mboe
(2)
|
Proved and Probable
Reserves:
|
3,604 Mboe
(2)
|
Proved Reserve Value
NPV10:
|
$29.9 million
(2)
|
Current Run Rate Cash
Flow:
|
$3.5 million
annualized
|
Development
Locations:
|
>40 net undrilled
locations
|
(1) Before
cash adjustments resulting from February 1, 2015 effective
date
|
(2) Based
on Sproule reserve evaluations effective December 31,
2014
|
Acquisition
Metrics
Based on the purchase price of the property for $16.5 million(1), the Acquisition
metrics are as follows:
Production:
|
$50,000/boe/d
|
Proved Reserves
2:
|
$6.87/boe
|
Proved and Probable
Reserves2:
|
$4.58/boe
|
Current Run Rate
Cashflow:
|
4.7 times
|
(1) Before
cash adjustments resulting from February 1, 2015 effective
date
|
(2) Based
on Sproule reserve evaluations effective December 31,
2014
|
Strategic Rationale
The Acquisition is consistent with Marquee's continuing strategy
to consolidate its core area, particularly capitalizing on
opportunities that offer operational synergy, and enhance the
quality of its asset base. The assets and associated drilling
inventory provide a significant expansion of the Company's current
focus area at Michichi.
The assets to be acquired are ideally situated within Marquee's
existing operations at Michichi and are expected to expedite
development and lead to an overall reduction in operating costs on
a flowing barrel basis. Recent drilling on the property indicates
oil weighting rates surpassing 90%, the asset's wells
are expected to deliver strong netbacks
and attractive economics despite low oil prices.The production
to be acquired is tied-in to Marquee infrastructure and future
drilling locations will require minimal tie-in costs and short
tie-in times.
The value of the Acquisition has been enhanced by two
significant discovery wells drilled by senior producers at
9-16-30-18W4M and 1-33-30-18W4M. The well at 9-16 is part of the
acquired assets and has been on production since July 2014. It has produced more than 46,000 boe
(91% oil and NGLs) to date, and is still producing at a rate of 220
boe/d. The well at 1-33, drilled adjacent to the acquired assets,
has been on production since August
2014 with initial production rates of 250 boe/d, and is
currently producing 150 boe/d (91% oil and NGLs). The Company has
identified more than 40 low-risk, high-quality light oil drilling
locations on the acquired lands, using a combination of well
control and 3D seismic.
Non-core Disposition
Marquee is also pleased to announce that it has sold a non-core,
oil asset located in in Southeastern
Saskatchewan for cash consideration of $3.48 million. The Transaction closed on
February 19, 2015.
Operations Update
Marquee drilled and completed one successful horizontal well at
Michichi in the first quarter of 2015. The well is expected
to be on production prior to the end of February. Marquee is
also planning to drill one additional vertical heavy oil well in
the Lloydminster area prior to the
end of the quarter. The Company's current production, based
on field estimates, is more than 5,500 boe/d before the asset sale
and acquisition described above.
Corporate Update
Marquee continues to realize improvements in reducing its field
operating and corporate office costs. As a result, the Company's
corporate operating and transportation costs decreased from an
average of $22.55/boe in 2013 to
$18.70/boe in 2014. The disposition
of high-cost, non-core properties, the closure of Marquee's field
office at Drayton Valley and the
addition of assets in areas with operational synergies, on their
own, are expected to generate corporate OPEX savings of almost
$0.50/boe. The Company is now
budgeting combined corporate operating and transportation costs at
less than $16/boe for 2015.
Marquee is also applying the same diligence to the Company's
G&A budget in 2015. Marquee's G&A costs have significantly
decreased from an average of $6.15/boe in 2013 to $3.69/boe for 2014. The Company is currently
targeting $3.25/boe for its 2015
G&A budget.
ABOUT MARQUEE
Marquee Energy Ltd. is a Calgary based, junior oil and gas company
focused on high rate of return oil development and production.
Marquee is committed to growing the company through exploitation of
existing opportunities and continued consolidation within its core
area at Michichi. The Company's shares are traded on the Toronto
Stock Exchange under the trading symbol "MQL.V" and on the OTCQX
marketplace under the symbol "MQLXF". An updated presentation and
additional information about Marquee may be found on its website
www.marquee-energy.com and in its continuous disclosure documents
filed with Canadian securities regulators on the System for
Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com.
FORWARD LOOKING STATEMENTS OR INFORMATION
Certain statements included or incorporated by reference in this
news release may constitute forward looking statements under
applicable securities legislation. Such forward looking
statements or information typically contain statements with words
such as "anticipate", "believe", "expect", "plan", "intend",
"estimate", "propose", or similar words suggesting future outcomes
or statements regarding an outlook. Forward looking
statements or information in this news release may include, but are
not limited to: the timing of matters related to the
Acquisition; the anticipated benefits of the Acquisition; the
Company's estimate of the number of drilling locations on the
assets to be acquired; anticipated favourable production economics
on the assets to be acquired; the proved and probable reserves
attributable to the assets to be acquired; the run rate cash flow
on the assets to be acquired; the Company's anticipated reduction
in OPEX and G&A spending; and business strategies, objectives
and outlook.
Such forward-looking statements or information are based on a
number of assumptions all or any of which may prove to be
incorrect. In addition to any other assumptions identified in
this document, assumptions have been made regarding, among other
things: that the Acquisition and all required approvals will be
completed within the timeline anticipated by Marquee; that the
parties will be able to satisfy, in a timely manner, the other
conditions to the closing of the Acquisition; the ability of the
Company to obtain equipment, services and supplies in a timely
manner to carry out its activities; the ability of the Company to
market crude oil, natural gas liquids and natural gas successfully
to current and new customers; the ability to secure adequate
product transportation; the timely receipt of required regulatory
approvals; the ability of the Company to obtain financing on
acceptable terms; interest rates; regulatory framework regarding
taxes, royalties and environmental matters; future crude oil,
natural gas liquids and natural gas prices; and management's
expectations relating to the timing and results of development
activities.
Forward-looking information is based on current expectations,
estimates and projections that involve a number of risks and
uncertainties which could cause actual results to differ materially
from those anticipated by the Company and described in the
forward-looking information. These risks and uncertainties include,
but are not limited to: risks regarding integration of Marquee and
the assets to be acquired; incorrect assessment of the value of the
assets tp be acquired; and the failure to meet the conditions or
regulatory approvals required to close the Acquisition. Other
material risk factors affecting the Company and its business are
contained in Marquee's Annual Information Form which is available
under Marquee's issuer profile on SEDAR at www.sedar.com.
The forward-looking information contained in this press release
is made as of the date hereof and the Company undertakes no
obligation to update publicly or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, unless required by applicable securities laws. The
forward looking information contained in this press release is
expressly qualified by this cautionary statement.
ADDITIONAL ADVISORIES
Boes are presented on the basis of one Boe for six Mcf of
natural gas. Disclosure provided herein in respect of Boe may be
misleading, particularly if used in isolation. A Boe conversion
ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Given that the value
ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 6:1, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Marquee Energy Ltd.