Property Divestiture: GS E&R Canada Inc.

On March 11, 2021, GS E&R Canada Inc. (“GSER” or the “Company”) filed a Notice of Intention to Make a Proposal (the “NOI”) pursuant to subsection 50.4(1) of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (the “BIA”) with the Office of the Superintendent of Bankruptcy. MNP Ltd. consented to act as trustee under the NOI (the “Proposal Trustee”).

GSER has filed an application for among other relief, an order approving a proposed sales and investment solicitation process (the “SISP”), which is to be managed by the Proposal Trustee with the assistance of Sayer Energy Advisors (“Sayer”). The Proposal Trustee has engaged Sayer to assist the Proposal Trustee with the sale of all of GSER’s oil and natural gas interests in the Maxhamish area of British Columbia (the “Property”). A copy of the SISP is found on Sayer’s website at www.sayeradvisors.com.

In the Maxhamish area of northeastern British Columbia, the Company holds mainly a 100% working interest in over 114,000 gross acres of land with wells producing natural gas from the Chinkeh “A” Pool.

Production net to GSER from Maxhamish in November 2020 was approximately 946 boe/d (5.5 MMcf/d of natural gas and 33 barrels of natural gas liquids per day) from the Chinkeh Formation.

The Company’s net operating income from Maxhamish in November 2020 was approximately $254,000 or $3.0 million on an annualized basis.

As of March 12, 2021, GSER had total deemed assets of $20.1 million, deemed liabilities of $24.4 million (net deemed assets of ($4.3 million)) with an LMR of 0.83. The Company’s asset value and LMR ratio include a deposit of $3,887,258 in place with the British Columbia Oil and Gas Commission.

Sproule Associates Limited (“Sproule”) prepared an independent reserves evaluation of the Property as part of the Company’s year-end reporting (the “Sproule Report”). The Sproule Report is effective December 31, 2019 using Sproule’s October 31, 2019 forecast pricing.

Sproule estimated that, as of December 31, 2019, the Maxhamish property contained remaining proved plus probable reserves of 14.2 Bcf of natural gas and 751,000 barrels of natural gas liquids (3.1 million boe), with an estimated net present value of $10.2 million using forecast pricing at a 10% discount. The net present value of the Property’s proved developed producing reserves was estimated to be approximately $5.8 million using forecast pricing at a 10% discount. In addition to the total proved plus probable reserves, Sproule assigned total possible reserves of approximately 47.1 Bcf of natural gas and 2.5 million barrels of natural gas liquids (10.4 million boe) with an estimated net present value of $12.2 million using forecast pricing at a 10% discount.

Offers relating to this divestiture as outlined in the SISP will be accepted until 12:00 pm on Thursday May 13, 2021.

For further information please feel free to contact: Ben Rye, Grazina Palmer or Tom Pavic at 403.266.6133.

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