Razor Energy Corp. — Non-Core Property Divestiture
Razor Energy Corp. (“Razor” or the “Company”) has engaged Sayer Energy Advisors to assist the Company with the sale of certain non-core oil and natural gas interests located in the Chin Coulee, Enchant/Retlaw, Badger, Majorville and Jumpbush areas of southern Alberta (the “Properties”).
Razor acquired the Properties in 2019 and has since refocused its corporate efforts and strategic direction to its core areas.
Average daily production net to Razor in August 2020 from the Properties consists of approximately 1.9 MMcf/d of natural gas and 297 barrels of oil and natural gas liquids per day (620 boe/d). Earlier this year, the Company voluntarily shut-in production with the onset of the COVID-19 pandemic. Prior to the shut-in, average daily production net to Razor from the Properties in January 2020 was approximately 659 boe/d (339 barrels of oil and natural gas liquids and 1.9 MMcf/d of natural gas).
Net operating income from the Properties for July and August 2020 averaged approximately $155,000/month, or $1.9 million on an annualized basis. Net operating income from the Properties in 2019 totaled approximately $3.1 million.
The Properties have high-return, low-risk reactivation potential as well as new drilling opportunities. Additional upside exists in waterflood programs as well as power generation potential.
Upper Mannville lithic channels are being exploited with horizontal multi-stage frac wellbores adjacent to Razor’s lands at Enchant/Retlaw. There is opportunity to develop these lithic channel trends on Razor’s lands with potential for up to 10 locations.
At Badger, Razor completed two reactivations in October 2020 for a production increase of approximately 40 boe/d at 102/14-24-016-18W4 and 100/15-24-016-18W4 and has two additional reactivations at 100/10-24-016-18W4 and 102/02-25-016-18W4 planned for 2021.
Open-hole horizontal re-entry sidetracks achieved strong results at Badger during the early 2000’s. There is opportunity to apply this method to the Badger and Jumpbush properties with the potential for up to ten locations.
At Jumpbush, the previous operator reactivated four horizontal wells and four vertical wells in 2017. There are 12 additional reactivation opportunities and five multi-lateral horizontal drilling locations which have been identified.
Sproule Associates Limited (“Sproule”) prepared an independent reserves evaluation of Razor’s properties as part of the Company’s year-end reporting (the “Sproule Report”). The Sproule Report is effective December 31, 2019 using Sproule’s December 31, 2019 forecast pricing. Sproule estimates that, as of December 31, 2019, the Properties contained remaining proved plus probable reserves of 1.5 million barrels of oil and natural gas liquids and 4.6 Bcf of natural gas (2.3 million boe), with an estimated net present value of $34.9 million using forecast pricing at a 10% discount.
Summary information relating to this divestiture is attached to this correspondence. More specific information is available at www.sayeradvisors.com. A package of more detailed confidential information will be sent to any party executing a Confidentiality Agreement.
Cash offers relating to this divestiture will be accepted until 12:00 pm on Thursday, December 17, 2020.
For further information please feel free to contact: Ben Rye, Grazina Palmer or Tom Pavic at 403.266.6133.
- Asset Sales and Acquisitions