Marketed: Canadian Firm’s US Subsidiary With North Dakota Waterflood Assets

The following information is provided by Energy Advisors Group Inc. (EAG), formerly PLS Divestment Services. All inquiries on the following listings should be directed to EAG. Hart Energy is not a brokerage firm and does not endorse or facilitate any transactions.

Energy Advisors Group Inc. (EAG) is marketing a company’s North Dakota assets as part of a larger corporate reorganization. The seller needs to realize a price of four years full cash flow for the properties and must sell the Canadian subsidiary that owns the U.S. operating company and assets. The company can not close an asset sale because of the cross border tax ramifications.

Motivated Seller. Energy Advisors Is Marketing U.S. Assets. The North Dakota Production and Waterflood properties include the following attributes.

North Dakota Waterfloods

• 82-Active Wells. (Five-Units)  Four-PUDS.  Three-Probable Locations. 7,900 Acres.
• Bottineau and Renville Counties, N.D.
• Immediate Infill and Development Drilling;
• Waterflood Production Optimization
• Bluell and Sherwood Development
• 3-D Proprietary Seismic Coverage
• Pool Delineation Opportunities
• About 97.5% Operated Working Interest and about 74.5% Net Revenue Interest
• Gross Production (June 2019): 376 barrels per day of Oil;  (28 Degree API Crude)
• Long Life Conventional Oil Production
• Shallow Decline w/ 4% Oil Cut Last 3-Yrs
• Operating Costs Average about $155,000 per Month
• Latest Net Cash Flow: $220,809 per Month
• Seller Asking Four Years Cash Flow
• Water Disposal; Saltwater Disposal; and Other Infrastructure In Place

As discussed above, the U.S. North Dakota assets include high operated working interest across five (5x) 5 units including:

• Haas Madison Unit: (99% Operated Working Interest; 75.1% Net Revenue Interest) 67 Total Wells. 27.5 API Oil
• North Haas: about 60.74% & 45.7% Net Revenue Interest (Non-Unit)
• Smith Unit: (74.75% Working Interest; 60.7% Net Revenue Interest; One Well;)
• Truro Madison: 97.6% Working Interest; 73.3% Net Revenue Interest; 23 Wells. 26.9 API; Expand Waterflood
• Mackobee Coulee: 100% Operated Working Interest; 75.3% Net Revenue Interest; 17 Wells; 27.4 Degree API;
• To date, the U.S. assets have produced approximately 16 million barrels of oil.

U.S. Long Life, Low Decline Conventional Oil Properties

• About 8,293 gross (7,905 net) acres both unitized and non-unitized production. The U.S. Acreage is a mix of HBP/HBU and primary term leaseholds.
• 111 total operated licensed wells including 82 active wells (61 producing, 17 water injection, three water source and one saltwater disposal).

Strong Company Volumes:

390 boe/d gross production from Williston Basin; Madison reservoir units

U.S. Geology

North Dakota Williston Basin geology is directly analogous to the offsetting Southeast Saskatchewan Williston Basin geology

Significant U.S. Oil in Place

Opportunity to increase oil recovery through infill drilling at each property by increasing drilling density (no downspacing regulations). Waterflood expansion/rework opportunities through further optimization and rebalancing work to augment existing flat production life.

Investment Opportunity:

• Opportunity to increase recovery factor through optimization of waterflood and undeveloped land;
• Unitized oil production with infill drilling potential;
• Seven proved and probable locations at Mackobee Coulee, Truro and Haas;
• Potential waterflood expansion project at Truro provides opportunity to ramp up production with minimal associated costs
• Drill ready locations at Truro and Mackobee
• Oil handling infrastructure and water disposal with capacity for increased production levels

U.S. Deal Structure

As described above, the EAG client will consider the sale Canadian Subsidiary that owns the U.S. operating company and assets in proportion to the total review of options available for the total company. Without consideration for the Canadian assets the Seller must contract the sale of the Canadian Subsidiary to minimize its tax consequences.

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For more information, contact Steve Henrich, director with EAG, at shenrich@energyadvisors.com or 403-294-1906.