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CALGARY,
AB, Dec. 8, 2022 /CNW/ - Tuktu Resources
Ltd. ("Tuktu" or the "Company") (TSXV: TUK) is pleased to
announce that on December 8, 2022 it
signed a purchase and sale agreement (the "Purchase Agreement")
with an arm's length private company (the "Vendor") to purchase
(the "Acquisition") certain oil and gas assets in the southern
Alberta Foothills (the "Assets").
Tuktu has agreed to purchase the Assets for an aggregate
purchase price of $1.3 million (the
"Purchase Price") with an effective date that will coincide with
closing. The Acquisition is expected to close early Q1 2023,
pending satisfaction of customary and transaction-specific closing
conditions, including the receipt of applicable shareholder and
regulatory approvals.
The Assets include a contiguous block (and some proximal lands),
comprising 19 gross (approximately 13.5 net) sections. These lands
are in the eastern edge of the Alberta thrust belt, and contain Paleozoic and
Mesozoic, clastic and carbonate reservoirs, some of which are light
oil prone. The Assets include a single well which has cumulative
production of since November 2007 of
approximately 10,400 bbls of light oil1, but due to
operational issues and lack of artificial lift, production has been
intermittent. This well is subject to a farm-out arrangement with a
third party whereby Tuktu will have a 65% after-payout working
interest.
The reserves attributable to the Assets were evaluated by an
independent reserves evaluator, Chapman Petroleum Engineering Ltd.
in a report with an effective date of June
30, 2022 (the "Chapman Report"), prepared in accordance with
the definitions, standards and procedures contained in the Canadian
Oil and Gas Evaluation Handbook and National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities. The
Chapman Report attributed to the Assets Proved Plus Probable
Reserves of 1.3 million BOEs and a before-tax NPV10 of $35 million. Tuktu intends to materially increase
existing production through well optimization over the next 18
months through the drilling of several offset horizontal wells in
the reservoirs that are confirmed to have oil charge.
The Purchase Price will be funded through (i) cash on hand; and
(ii) the issuance of units of the Company ("Units"), which Units
are comprised of one common share of the Company ("Common Share")
and one common share purchase warrant ("Warrant"), as detailed
further below.
Acquisition Highlights and
Rationale
The Acquisition is aligned with Tuktu's long-term business
strategy and establishes a position in the Alberta Foothills. With
its multidecadal experience in this area, the team intends to
exploit the potentially abundant natural fractures in these
reservoirs to achieve highly economic initial production rates.
Similar horizontal well programs elsewhere in the Foothills have
yielded impressive economic returns, such as in the central Alberta
Foothills Cardium reservoirs. Tuktu recently purchased a section
within the play at a Crown land sale, and in aggregate with the
Assets, the total land holdings for the play could yield up to 20
horizontal well locations.
Consideration
Tuktu will acquire the Assets for an aggregate Purchase Price of
$1.3 million, consisting of
$100,000 in cash and the issuance of
10.0 million Units, with a deemed price of $0.12 per Unit. The Warrants will be exercisable
at $0.30 per Common Share for a
period of three (3) years from the closing date of the Acquisition.
No finders' fee is payable by Tuktu in respect of the
Acquisition.
Approvals
The Acquisition is subject to applicable regulatory approvals,
applicable shareholder approval and TSX Venture Exchange review and
approval. Pursuant to the Purchase Agreement, the parent entity of
the Vendor (the "Vendor Parent") must seek approval of its
shareholders in respect of the sale of the Assets (the "Shareholder
Approval"). The Shareholder Approval is expected to be sought by
written resolution in accordance with the Business Corporations Act
(British Columbia) (the "Written
Consent") or, by way of a shareholders' meeting. Vendor Parent
intends to call a special meeting (the "Meeting") of shareholders
as soon as reasonably possible to obtain the Shareholder Approval;
however, if the Vendor Parent is able to obtain the Written Consent
prior to the Meeting, the Meeting may be postponed or
cancelled.
Reserves
The Assets are being purchased by Tuktu for their strategic
value and for the potential to exploit the fault-repeated Mesozoic
aged reservoirs in the land base and have a PDP NPV10% BT and 2P
NPV10% BT value of approximately $590
thousand and $35 million,
respectively, as outlined in the tables below2,3. Below
is a summary of the reserves attributable to the Assets and the
future net revenue of such reserves, based on the Chapman
Report.
|
SUMMARY OF OIL AND
NATURAL GAS RESERVES (1)
|
|
|
AS OF June 30,
2022
|
|
|
FORECAST PRICES AND
COSTS
|
|
|
Light and Medium
Oil
|
|
Conventional Natural
Gas
|
|
Natural gas
Liquids
|
|
|
|
|
|
|
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
|
RESERVES
CATEGORY
|
(Mbbls)
|
|
(Mbbls)
|
|
(MMcf)
|
|
(MMcf)
|
|
(Mbbls)
|
|
(Mbbls)
|
|
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
27
|
|
19
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
Developed
Non-Producing
|
-
|
|
-
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
Undeveloped
|
-
|
|
-
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
TOTAL PROVED
|
27
|
|
19
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
PROBABLE
|
1,031
|
|
756
|
|
1,013
|
|
951
|
|
101
|
|
67
|
|
|
TOTAL PROVED PLUS
PROBABLE
|
1,059
|
|
776
|
|
1,013
|
|
951
|
|
101
|
|
67
|
|
|
|
|
|
NET PRESENT VALUE OF
FUTURE NET REVENUE
|
|
|
|
BEFORE INCOME TAXES
DISCOUNTED (%/year) (1)
|
|
FORECAST PRICES AND
COSTS
|
|
0 %
|
|
5 %
|
|
10 %
|
|
15 %
|
|
20 %
|
RESERVES
CATEGORY
|
($000s)
|
|
($000s)
|
|
($000s)
|
|
($000s)
|
|
($000s)
|
Developed
Producing
|
868
|
|
709
|
|
590
|
|
501
|
|
432
|
Developed
Non-Producing
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Undeveloped
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
TOTAL PROVED
|
868
|
|
709
|
|
590
|
|
501
|
|
432
|
|
|
|
|
|
|
|
|
|
|
PROBABLE
|
62,087
|
|
45,125
|
|
34,497
|
|
27,357
|
|
22,296
|
TOTAL PROVED PLUS
PROBABLE
|
62,955
|
|
45,834
|
|
35,087
|
|
27,858
|
|
22,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Future net revenue
estimates were calculated using the pricing assumptions set forth
below.
|
|
Pricing Assumptions
|
|
|
Alberta
|
Western
|
|
|
|
|
|
|
|
|
Synthetic
|
Canada
|
|
AECO
|
|
|
C5+
|
Date
|
WTI
|
Brent
Spot
|
Crude
|
Select
|
Exchange
|
Spot
|
Propane
|
Butane
|
Pentane
|
|
$US/bbl
|
$US/bbl
|
$C/bbl
|
$C/bbl
|
Rate
|
$C/Gj
|
$C/bbl
|
$C/bbl
|
$C/bbl
|
2022 (6
months)
|
104.71
|
104.71
|
132.1
|
109.61
|
0.79
|
5.47
|
53.61
|
67.08
|
130.74
|
2023
|
92.05
|
92.26
|
116.0
|
96.31
|
0.79
|
4.36
|
48.98
|
63.39
|
114.88
|
2024
|
82.90
|
82.03
|
104.5
|
86.69
|
0.79
|
4.10
|
44.90
|
58.66
|
103.41
|
2025
|
78.58
|
77.92
|
99.0
|
82.16
|
0.79
|
3.88
|
42.27
|
55.70
|
98.00
|
2026
|
80.15
|
79.48
|
101.0
|
83.81
|
0.79
|
3.96
|
43.13
|
56.82
|
99.97
|
2027
|
81.76
|
81.07
|
103.1
|
85.50
|
0.79
|
4.04
|
43.99
|
57.97
|
101.98
|
2028
|
83.39
|
82.69
|
105.1
|
87.22
|
0.79
|
4.12
|
44.87
|
59.13
|
104.03
|
2029
|
85.06
|
84.35
|
107.2
|
88.97
|
0.79
|
4.20
|
45.78
|
60.32
|
106.12
|
2030
|
86.76
|
86.03
|
109.3
|
90.75
|
0.79
|
4.29
|
46.70
|
61.53
|
108.25
|
2031
|
88.50
|
87.76
|
111.5
|
92.58
|
0.79
|
4.37
|
47.63
|
62.77
|
110.42
|
2032
|
90.27
|
89.51
|
113.8
|
94.44
|
0.79
|
4.46
|
48.59
|
64.03
|
112.64
|
2033
|
92.07
|
91.30
|
116.0
|
96.33
|
0.79
|
4.55
|
49.57
|
65.31
|
114.90
|
2034
|
93.91
|
93.13
|
118.4
|
98.27
|
0.79
|
4.64
|
50.56
|
66.62
|
117.21
|
2035
|
95.79
|
94.99
|
120.7
|
100.24
|
0.79
|
4.73
|
51.58
|
67.96
|
119.57
|
2036
|
97.71
|
96.89
|
123.1
|
102.25
|
0.79
|
4.83
|
52.61
|
69.33
|
121.97
|
2037
|
99.66
|
98.83
|
125.6
|
104.31
|
0.79
|
4.92
|
53.67
|
70.71
|
124.41
|
escalating 2%
after 2037
|
|
|
|
|
|
|
|
|
|
About Tuktu Resources
Ltd.
The Acquisition establishes Tuktu as a player in the Foothills
area of southern Alberta. With its
multidecadal experience in this area, Tuktu intends to expand its
holdings within this area, while it continues to evaluate Deep
Basin and Foothills assets for potential acquisitions. For
additional information about Tuktu please contact:
Tuktu Resources Ltd.
501, 888 – 4th Avenue S.W.
Calgary, Alberta T2P 0V2
This press release does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities in
the United States. The securities
have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or
any state securities laws and may not be offered or sold within
the United States or to U.S.
Persons unless registered under the U.S. Securities Act and
applicable state securities laws or an exemption from such
registration is available.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this press
release.
All amounts in this press release are stated in Canadian dollars
unless otherwise specified.
FORWARD LOOKING INFORMATION
ADVISORIES
Certain information contained in the press release may
constitute forward-looking statements and information
(collectively, "forward-looking statements") within the meaning of
applicable securities legislation that involve known and unknown
risks, assumptions, uncertainties and other factors.
Forward-looking statements may be identified by words like
"anticipates", "estimates", "expects", "indicates", "intends",
"may", "could" "should", "would", "plans", "target", "scheduled",
"projects", "outlook", "proposed", "potential", "will", "seek" and
similar expressions. Forward-looking statements in this press
release include statements regarding: the Company's
expectations regarding the Acquisition, including the Purchase
Price and the expected timing of closing; the Company's intention
to fund the Purchase Price through cash on hand and the issuance of
Units; the anticipated terms of the Warrants; the Company's
expectations with respect to the approvals required in connection
with the Acquisition, including the anticipated method and timing
of the Shareholder Approval; the Company's expectations regarding
the land comprising the Assets, including with respect to the
farm-out arrangement with a third party whereby it is expected that
the Vendor will have a 65% working interest once payout is
achieved, the anticipated timing of such payout, and the Company's
plans to increase existing production through well optimization, as
well as executing several offset horizontal wells in the reservoirs
confirmed to have oil charge in connection with such; the Company's
expectations that it will be able to test the production
capability and commerciality of a new play within the southern
Alberta Foothills; the Company's expectation that the Acquisition
is aligned with its long-term business strategy and that the
Acquisition will establish the Company's position in the
southern Alberta Foothills; the number of potential drilling
locations available to the Company following the Acquisition; the
Company's expectations with respect to the southern Alberta
Foothills, including that the Company anticipates using its
multidecadal experience in such area to exploit the potentially
abundant natural fractures in these reservoirs to gain economic,
initial production rates and ultimate reserves; the potential
abundance of the natural fractures in these areas; the Company's
expectations with respect to a recently purchased section within
the play, including the anticipated future yields of such play; the
Company's ability to exploit the fault-repeated Mesozoic aged
reservoirs in the land base and the Company's expectations with
respect to the potential value of such; the Company's business
strategy, plans, objectives, priorities and desired investment
profile characteristics; financial and operating forecasts with
respect to the Assets; anticipated production growth; expectations
with respect to net operating income and growth as a result of
robust drilling economics; estimated acquisition metrics including
estimated net operating income and production; projections with
respect to operating expenditures and capital expenditures; and
other similar statements. Such statements reflect the current views
of management with respect to future events and are subject to
certain risks, uncertainties and assumptions that could cause
results to differ materially from those expressed in the
forward-looking statements.
Statements relating to "reserves" are deemed to be forward
looking statements, as they involve the implied assessment, based
on certain estimates and assumptions, that the reserves described
exist in the quantities predicted or estimated and that the
reserves can be profitably produced in the future. There are
numerous uncertainties inherent in estimating quantities of crude
oil, natural gas and NGL reserves and the future cash flows
attributed to such reserves. The reserve and associated cash flow
information set forth above are estimates only. In general,
estimates of economically recoverable crude oil, natural gas and
NGL reserves and the future net cash flows therefrom are based upon
a number of variable factors and assumptions, such as historical
production from the properties, production rates, ultimate reserve
recovery, timing and amount of capital expenditures, marketability
of oil and natural gas, royalty rates, the assumed effects of
regulation by governmental agencies and future operating costs, all
of which may vary materially. For these reasons, estimates of the
economically recoverable crude oil, NGL and natural gas reserves
attributable to any particular group of properties, classification
of such reserves based on risk of recovery and estimates of future
net revenues associated with reserves prepared by different
engineers, or by the same engineers at different times, may vary.
Tuktu's and the Assets' actual production, revenues, taxes and
development and operating expenditures with respect to their
respective reserves will vary from estimates thereof and such
variations could be material.
With respect to forward-looking statements contained in this
press release, the Company has made assumptions regarding, among
other things: that the Company will be able to successfully
complete the Acquisition on substantially the terms contemplated
and that such transactions will be consummated on terms currently
contemplated; future pricing; commodity prices; the COVID-19
pandemic and the duration and impact thereof; future exchange and
interest rates; supply of and demand for commodities; inflation;
the availability of capital on satisfactory terms; the availability
and price of labour and materials; the impact of increasing
competition; conditions in general economic and financial markets;
access to capital; the receipt and timing of regulatory, TSX
Venture Exchange and other required approvals; the ability of the
Company to implement its business strategies and complete future
acquisitions; and effects of regulation by governmental
agencies.
Factors that could cause actual results to vary from
forward-looking statements or may affect the operations,
performance, development and results of the Company's businesses
include, among other things: risks and assumptions associated with
operations, such as the Company's ability to successfully implement
its strategic initiatives and achieve expected benefits;
assumptions regarding the Assets and the value of the Acquisition;
assumptions concerning operational reliability; risks inherent in
the Company's future operations; the Company's ability to generate
sufficient cash flow from operations to meet its future
obligations; increases in maintenance, operating or financing
costs; the realization of the anticipated benefits of future
acquisitions, if any; the availability and price of labour,
equipment and materials; competitive factors, including competition
from third parties in the areas in which the Company intends to
operate, pricing pressures and supply and demand in the oil and gas
industry; fluctuations in currency and interest rates; inflation;
risks of war, hostilities, civil insurrection, pandemics (including
COVID-19), instability and political and economic conditions in or
affecting countries in which the Company intends to operate
(including the ongoing Russian-Ukrainian conflict); severe weather
conditions and risks related to climate change; terrorist threats;
risks associated with technology; changes in laws and regulations,
including environmental, regulatory and taxation laws, and the
interpretation of such changes to the management team's future
business; availability of adequate levels of insurance; difficulty
in obtaining necessary regulatory approvals and the maintenance of
such approvals; general economic and business conditions and
markets; and such other similar risks and uncertainties. The impact
of any one assumption, risk, uncertainty or other factor on a
forward-looking statement cannot be determined with certainty, as
these are interdependent and the Company's future course of action
depends on the assessment of all information available at the
relevant time.
The forward-looking statements contained in this press release
are made as of the date hereof and the parties do not undertake any
obligation to update or revise any forward-looking statements or
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
FORWARD LOOKING FINANCIAL
INFORMATION
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about the Company's prospective operational and financial
results, all of which are subject to the same assumptions, risk
factors, limitations, and qualifications as set forth in the above
paragraphs. FOFI contained in this press release was made as of the
date of this press release and was provided for the purpose of
providing further information about the Company's future business
operations, the Company disclaims any intention or obligation to
update or revise any FOFI contained in this press release, whether
as a result of new information, future events or otherwise, unless
required pursuant to applicable securities laws. Readers are
cautioned that the FOFI contained in this press release should not
be used for purposes other than for which it is disclosed
herein.
OIL AND GAS ADVISORIES
Reserves estimates in this press release in respect of the
Acquisition are based on the evaluations prepared by Chapman
Petroleum Engineering Ltd. as set out in the Chapman Report
effective as at June 30, 2022, which
was prepared in accordance with NI 51-101 and the COGE Handbook.
The Chapman Report was based on the average forecast pricing of
Chapman Petroleum Engineering Ltd. and inflation rates and foreign
exchange rates as at July 1, 2022,
which is set forth under the heading "Pricing Assumptions" above.
There is no assurance that the forecast prices and costs
assumptions will be attained, and variances could be material. The
recovery and reserve estimates of the crude oil, natural gas
liquids and natural gas reserves provided herein are estimates only
and there is no guarantee that the estimated reserves will be
recovered. Actual crude oil, natural gas and natural gas liquids
reserves may be greater than or less than the estimates provided
herein.
This press release discloses unbooked drilling locations.
Unbooked locations are internal estimates based on the Company's
prospective acreage and an assumption as to the number of wells
that can be drilled per section based on industry practice and
internal review. Unbooked locations do not have attributed reserves
or resources. Unbooked locations have specifically been identified
by management as an estimation of our multi-year drilling
activities based on evaluation of applicable geologic, seismic, and
engineering, production and reserves data on prospective acreage
and geologic formations. The drilling locations on which we
actually drill wells will ultimately depend upon the availability
of capital, regulatory approvals, seasonal restrictions, oil and
natural gas prices, costs, actual drilling results and other
factors. There is no certainty that we will drill all of these
drilling locations and if drilled there is no certainty that such
locations will result in additional oil and gas reserves, resources
or production.
Certain information in this press release may constitute
"analogous information" as defined in NI 51-101, with respect to
the Assets including, but not limited to, information relating to
well locations that are in geographical proximity to or believed to
be on-trend with other drilling locations to be acquired by the
Company pursuant to the Acquisition. There is no certainty
that the results of the analogous information or inferred thereby
will be achieved by the Company and such information should not be
construed as an estimate of future production levels or the actual
characteristics and quality of the Assets.
1 Source:
GeoScout. Associated gas initially comprised between 30 to 50% of
production on a per BOE basis; however, in the last 6 months of
production ended October 2022, associated gas represented 5% or
less than the total production.
|
|
2 Before tax
net present value based on a 10 percent discount rate and the price
deck set forth under "Pricing Assumptions" below. Estimated
values of future net revenues do not represent the fair market
value of the reserves.
|
|
3 All
reserves information contained in this press release is based on
the Chapman Report.
|
|
|
|
SOURCE Tuktu Resources Ltd.