Brian Zinchuk is editor and owner of Pipeline Online
REGINA, CALGARY – On Dec. 19, two companies put out press releases involving a total of four transactions with four companies involved affecting three provinces, but no one really wanted to say publicly who the other parties were.
Clear as mud?
Here’s what’s going on, according to conversations with ROK Resources Inc. president and CEO Cam Taylor and Whitecap Resources Inc. director of Financial Planning and Analysis Tyler Maguire, the evening of Dec. 19.
ROK Resources of Regina announced that they were doing both an acquisition and a disposition with another company. In what is largely a land swap, they were acquiring 1,500 boepd production (69 per cent liquids) in southeast Saskatchewan, but selling 475 boepd (100 per cent liquids) of mostly non-operated properties in southwest Saskatchewan to the same company they were buying land from in the southeast. ROK was paying $26.5 million to the other party as part of the deal.
Whitecap Resources announced three separate dispositions totalling 10,000 boepd. Without saying who the other party was, the first one was a match to the ROK announcement, with a sale of 1,500 boepd and picking up 475 boepd. Call that Disposition A, and it is expected to close on Jan. 24, 2023
Whitecap’s Disposition B was to a private company operating in Saskatchewan, and involved roughly 3,500 boepd of production, nearly all of which was in Saskatchewan, but a marginal amount of production in Manitoba was also included. Whitecap would not release where the production was, who the buyer was, or the dollar value. This deal is expected to close in January.
Whitecap’s Disposition C was for 4,500 boepd production spread across Alberta to a private company operating in Alberta. Again, the price was not disclosed. This third deal is also expected to close in January.
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ROK deal
Taylor explained that the area they bought in southeast Saskatchewan runs from Highway 18 south to the U.S. border, and from just east of Frobisher to the Manitoba border.
This effectively doubles their existing 1,500 boepd in that area, much of which was purchased from Federated Co-operatives Limited last February.
“Basically, we picked up all of the stuff that was directly adjacent to our existing producing properties from them,” Taylor said.
He noted that some of the properties were initially developed by ROK and sold to TORC Oil + Gas in 2018. “So we know it well, and it’s a really good fit for us. It’s a lot of symbiotic-type pipelines, batteries, facilities and gas infrastructure that all fits together really well,” he said.
“There’s a lot of operational synergies here. We’ve drilled wells recently that we’re now going to be able to tie into facilities that we’re going to own come Jan. 24.
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Two operators will be joining ROK as a result of the deal.
As for the properties in southwest Saskatchewan, they are principally in the Butte area.
Whitecap
And that Butte area was mentioned in Whitecap’s press release.
Whitecap noted that those three agreements were “to dispose of certain non-strategic assets, effective October 1, 2022 for aggregate consideration of $419 million, consisting of $394 million in cash and producing assets that consolidate working interest in our operated Butte, Saskatchewan core area. Current production from the disposed assets is approximately 11,000 boepd and is expected to average approximately 10,000 boepd in 2023 (in each case, net of acquired production). The transactions are expected to close in January 2023, subject to customary closing considerations. Upon closing, Whitecap will have successfully disposed of the non-strategic assets that were marketed for disposition.”
Precision Drilling Rig 275 in the Whitecap-operated Weyburn Unit. Photo by Brian Zinchuk
The company announced it had met its first debt milestone of $1.8 billion, and was setting its next net debt milestone of $1.3 billion, now expected to be achieved by mid-2023, five months earlier than initially forecasted based on current strip prices.
The company increased its dividend. “The new monthly dividend of $0.0483 per share is up from the current monthly dividend of $0.0367 per share, which equates to $0.58 per share annually and is effective with the January 2023 dividend, payable in February 2023,” Whitecap said in a release.
Maguire said Whitecap’s 2023 capital budget for Saskatchewan was $333 million, of which 10 per cent was focused on facilities. The company intended to drill 54 wells (all gross) in southeast Saskatchewan outside of the Weyburn Unit, and 19 wells within the Weyburn Unit. There are 44 wells planned for southwest Saskatchewan and 53 wells planed for the Viking area of west central Saskatchewan. The total is 180 gross wells in Saskatchewan in 2023.
The company is continue to work on its Saskatchewan carbon hub, and has five memorandums of understanding signed in that regard. The total volume of CO2 is expected to be between 1.2 and 3 million tonnes per year. The company is also working on multiple CO2 hubs in Alberta.
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