Strategic Alternatives Process: Briko Energy Corp.
Briko Energy Corp. (“Briko” or the “Company”) has engaged Sayer Energy Advisors to assist the Company with a strategic alternatives process. The Company is open to reviewing all alternatives, with potential outcomes to this process including, but not limited to, a sale of some or all of the assets, a recapitalization of the Company or a sale or merger of the Company.
Briko is a junior oil and natural gas company which commenced operations on December 20, 2018 resulting from the plan of arrangement involving Ikkuma Resources Corp., Pieridae Energy Limited, Briko and the shareholders of Ikkuma.
As at September 30, 2020, Briko has no bank debt, working capital of $453,000 and total tax pools of approximately $12.3 million. Additional corporate information relating to Briko will be provided to parties upon execution of a confidentiality agreement.
The Company’s main assets are focused in the Cardium Formation, located in the foothills area of Alberta. Briko’s assets comprise a large contiguous land base in the Alberta foothills area. The assets are geographically located between Grande Prairie and Fort MacLeod, Alberta specifically the Stolberg, West Ansell, Kiskiu, Narraway and Cabin Creek areas (the “Properties”).
The Properties provide a stable, low-decline production base with average daily production net to Briko in the third quarter of 2020 of approximately 557 boe/d, consisting of 2.3 MMcf/d of natural gas and 170 barrels of oil and natural gas liquids per day.
Briko’s assets include an interest in both pipeline and facility infrastructure to transport production to the Ram River Gas Plant, other natural gas plants and NOVA sales meters without incurring third party disruption.
As at December 31, 2020 Briko had an interest in 285,211 gross (195,028 net) acres of undeveloped land and numerous drilling locations with significant potential. There are no immediate expiry issues on the lands.
The Company’s net operating income for the third quarter of 2020 was approximately, $270,000, or $1.1 million on an annualized basis. This includes income from royalties, processing, transportation and gathering.
As of March 6, 2021, per the AER, Briko had total deemed assets of $17.6 million, deemed liabilities of $2.6 million (net deemed assets of $15.0 million) with an LMR of 6.76.
Deloitte LLP (“Deloitte”) prepared an independent reserves evaluation of Briko’s properties as part of the Company’s year-end reporting (the “Deloitte Report”). The Deloitte Report is effective December 31, 2020 using average pricing from four independent consultant evaluators, including Deloitte, GLJ Petroleum Consultants Ltd., McDaniel & Associates Consultants Ltd. and Sproule Associates Limited (“IC4 Consultant Average”) January 1, 2021 forecast pricing.
Deloitte estimated that, as of December 31, 2020, the Properties contained remaining proved plus probable reserves of 13.3 Bcf of natural gas and 793,000 barrels of oil and natural gas liquids (3.0 million boe), with an estimated net present value of $17.2 million using forecast pricing at a 10% discount.
Of the 2.3 million boe of total proved reserves, 58% is from the Stolberg area and 28% is from the Kiskiu area. The proved developed non-producing reserves of 478,000 boe at Stolberg require future development capital of only $124,000.
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 (copy attached).
Proposals relating to this process will be accepted until 12:00 pm on Thursday, April 22, 2021.
For further information please feel free to contact: Ben Rye, Grazina Palmer or Tom Pavic at 403.266.6133.
- Asset Sales and Acquisitions