/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR
DISSEMINATION IN UNITED STATES.
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION
OF SECURITIES LAWS./
CALGARY,
AB, March 21, 2023 /CNW/ - Tuktu Resources
Ltd. ("Tuktu" or the "Company") (TSXV: TUK) is pleased to
announce that on March 20, 2023, the
Company entered into a purchase and sale agreement (the
"Acquisition") with an arm's length publicly traded company (the
"Vendor") to purchase certain natural gas assets in the southern
Alberta Foothills (the "Assets").
Tuktu has agreed to purchase the Assets for an aggregate
purchase price of $2.25 million (the
"Purchase Price"), subject to customary adjustments, with an
effective date of January 1, 2023.
The Purchase Price will be funded through cash on hand. No finders'
fee is payable by Tuktu in respect of the Acquisition. The
Acquisition is expected to close in early Q2 2023, pending
satisfaction of customary closing conditions, including the receipt
of TSX Venture Exchange ("TSXV") and other customary regulatory
approvals.
The Assets are mostly late-life, Foothills Cretaceous age
natural gas assets with current production of approximately 2.44
MMcf/d1 (or 406 BOE/d) and an estimated annual decline
rate of 7%. Tuktu management estimates annualized net operating
income from the Assets to be approximately $2.4 million in 2022 and $1.0 million for the 12 months post closing of
the Acquisition, based on recent natural gas forward strip
prices2. The Assets also include approximately 8,331
gross (8,261 net) hectares. These lands are in the eastern edge of
the Alberta thrust belt, and
within the shallow gas producing areas of southeastern Alberta. Also, included is a sweet gas plant
with a name-plate capacity of 140 e3m3/d (approximately 5
MMcf/d).
The reserves attributable to the Assets were evaluated by an
independent reserves evaluator, GLJ Ltd., in a report with an
effective date of January 1, 2023
(the "GLJ Report"), prepared in accordance with the definitions,
standards and procedures contained in the Canadian Oil and Gas
Evaluation Handbook (the "COGE Handbook") and National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities
("NI 51-101"). The GLJ Report attributed proved plus probable
reserves of 1.45 million BOEs to the Assets and a before-tax NPV10
of $6.2 million.
Acquisition Highlights and Rationale
The Acquisition is aligned with Tuktu's long-term business
strategy and establishes an additional position in the Alberta
Foothills. With its multidecadal experience in this area, the Tuktu
management team intends to exploit the potentially abundant natural
fractured oil and gas reservoirs in the area and leverage acquired
infrastructure to significantly reduce unit operating costs and
expand production.
Purchase
Metric
|
|
|
|
Trailing
decline
|
7 %
|
|
|
Operating
Expenses3 (12 mo trailing with trans) $/Boe
|
$8.97
|
|
|
Net Operating Income
("NOI")4 (est. adjustments)5
|
$122,218
|
|
|
Purchase
Price
|
$2,250,000
|
|
|
Est. Purchase Price
with adjustments
|
$2,127,782
|
|
|
Forward NOI on Current
Strip6
|
$1,015,807
|
|
|
Adjusted Purchase
Price/Forward NOI7
|
2.1 X
|
|
|
Purchase Price/PDP
NPV10%
|
0.62
X
|
|
|
Purchase Price
($/BOE-PDP)
|
$3.09
|
|
|
Purchase Price
($/BOE-TP)
|
$2.32
|
|
|
Purchase Price
($/BOE-TPP)
|
$1.55
|
_________________________________
|
|
1 January
2023 estimated production
|
2 Based on
oil and gas commodity strip pricing at January 25, 2023.
|
3 Based on
Vendor's books and records.
|
Approvals
The Acquisition is subject to applicable regulatory approvals
and applicable TSXV approval.
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 before-tax proved
developed producing NPV10% and before-tax total proved plus
probable NPV10% value of approximately $3.7
million and $6.2 million,
respectively, as outlined in the tables below[8],[9].
Below is a summary of the reserves attributable to the Assets and
the future net revenue of such reserves, based on the GLJ
Report.
|
SUMMARY OF OIL AND
NATURAL GAS RESERVES
|
|
As of January 1,
2023
|
|
|
FORECAST PRICES AND
COSTS
|
|
|
Conventional Natural
Gas
|
|
Oil
Equivalent
|
|
Gross Working
Interest
|
Net
|
|
Gross Working
Interest
|
Net
|
|
(MMcf)
|
(MMcf)
|
|
(Mboe)
|
(Mboe)
|
RESERVES
CATEGORY
|
|
|
|
|
|
PROVED
|
|
|
|
|
|
Developed
Producing
|
4,362.9
|
3,581.4
|
|
727.1
|
596.9
|
Developed
Non-Producing
|
1,457.2
|
1,320.1
|
|
242.9
|
220.0
|
Undeveloped
|
0.0
|
0.0
|
|
0.0
|
0.0
|
TOTAL PROVED
|
5,820.1
|
4,901.5
|
|
970.0
|
816.9
|
PROBABLE
|
2,873.8
|
2,397.1
|
|
479.0
|
399.5
|
TOTAL PROVED PLUS
PROBABLE
|
8,693.9
|
7,298.6
|
|
1,449.0
|
1,216.4
|
|
|
|
|
|
|
_______________________________________
|
4 Non-GAAP
Financial Measure. See "Non-GAAP and Other Measures".
|
5 Assumes a
closing date of April 15, 2023.
|
6 Based on
oil and gas commodity strip pricing at January 25, 2023.
|
7 Non-GAAP
Ratio. See "Non-GAAP and Other Measures".
|
8 Before tax
net present value based on a 10 percent discount rate and the price
deck set forth under "Pricing Assumptions" below. Estimated values
of future 9net revenues do not represent the fair market value of
the reserves.
|
9 All
reserves information contained in this press release is based on
the GLJ Report.
|
|
|
NET PRESENT VALUE OF
FUTURE CASH FLOW
|
|
BEFORE INCOME TAXES
DISCOUNTED (%/year) (1)
|
|
FORECAST PRICES AND
COSTS
|
|
0 %
|
|
5 %
|
|
10 %
|
|
12 %
|
|
15 %
|
|
20 %
|
|
($MM)
|
|
($MM)
|
|
($MM)
|
|
($MM)
|
|
($MM)
|
|
($MM)
|
RESERVES
CATEGORY
|
|
|
|
|
|
|
|
|
|
|
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
5.2
|
|
4.4
|
|
3.7
|
|
3.4
|
|
3.1
|
|
2.6
|
Developed
Non-Producing
|
2.5
|
|
1.4
|
|
0.8
|
|
0.6
|
|
0.4
|
|
0.3
|
Undeveloped
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
TOTAL PROVED
|
7.8
|
|
5.8
|
|
4.4
|
|
4.0
|
|
3.5
|
|
2.8
|
PROBABLE
|
6.9
|
|
3.3
|
|
1.8
|
|
1.4
|
|
1.1
|
|
0.8
|
TOTAL PROVED PLUS
PROBABLE
|
14.6
|
|
9.0
|
|
6.2
|
|
5.5
|
|
4.6
|
|
3.6
|
|
(1) Future net
revenue estimates were calculated using the pricing assumptions set
forth below.
|
|
AECO
|
Date
|
Spot
|
|
$C/MMBtu
|
2023
|
4.23
|
2024
|
4.40
|
2025
|
4.21
|
2026
|
4.27
|
2027
|
4.34
|
2028
|
4.43
|
2029
|
4.51
|
2030
|
4.60
|
2031
|
4.69
|
2032
|
4.79
|
2033
|
4.89
|
2034
|
4.98
|
2035
|
5.08
|
2036
|
5.18
|
2037
|
5.29
|
|
|
escalating
at
|
2 %
|
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 further 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; the Company's expectations
with respect to the approvals required in connection with the
Acquisition; the Company's expectations regarding the land
comprising the Assets; the Company's expectation that the
Acquisition is aligned with its long-term business strategy and
that the Acquisition will establish the Company's additional
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 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; 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, TSXV and
other required approvals; the ability of the Company to implement
its business strategies and complete future acquisitions; the
ability of the Company to significantly reduce unit operating costs
and increase production; 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; risks regarding the Company's ability to significantly
reduce operating costs and increase production; 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 prospective operational and financial results of
the Assets, 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.
NON-GAAP AND OTHER FINANCIAL
MEASURES
Throughout this press release, Tuktu discloses certain measures
to analyze financial performance, financial position, and cash
flow. These non-GAAP and other financial measures are not
standardized financial measures under IFRS and might not be
comparable to similar measures presented by other companies where
similar terminology is used. Investors are cautioned that these
measures should not be construed as alternatives to or more
meaningful than the most directly comparable IFRS measures as
indicators of the Company's performance.
Non-GAAP Financial
Measures
Net Operating Income- Management feels net operating
income is a key industry benchmark and measure of operating
performance of the Company that assists management and investors in
assessing the Company's profitability and is commonly used by other
petroleum and natural gas producers. Net operating income is
calculated as petroleum and natural gas revenue less royalties,
transportation and operating expenses.
Non-GAAP Ratios
Ratio of Purchase Price to Forecasted Net Operating
Income is calculated as the purchase price of the Assets
divided by annual net operating income.
OIL AND GAS ADVISORIES
Reserves estimates in this press release in respect of the
Acquisition are based on the evaluations prepared by GLJ Ltd. as
set out in the GLJ Report effective as at January 1, 2023, which was prepared in accordance
with NI 51-101 and the COGE Handbook. The GLJ Report was based on
the average forecast pricing of GLJ, McDaniel & Associates
Consultants Ltd. and Sproule Associates Ltd. as at January 1, 2023 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.
The term "BOE" or barrels of oil equivalent may be misleading,
particularly if used in isolation. A BOE conversion ratio of six
thousand cubic feet of natural gas to one barrel of oil equivalent
(6 Mcf: 1 bbl) is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Additionally, given that the
value ratio based on the current price of crude oil, as compared to
natural gas, is significantly different from the energy equivalency
of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an
indication of value.
This press release contains estimates of the net present value
of the Company's future net revenue from reserves associated with
the Assets. Such amounts do not represent the fair market value of
such reserves. The recovery and reserve estimates provided herein
are estimates only and there is no guarantee that the estimated
reserves will be recovered. The net present value (or NPV) of the
Assets' base production is a snapshot in time, and is based on the
reserves evaluated using Pricing Assumptions set forth above. The
Assets' NPV is calculated using a discount rate of 10%, on a before
tax basis and is the sum of the present value of proved plus
probable developed producing reserves based on the Pricing
Assumptions. It should not be assumed that the undiscounted or
discounted NPV of future net revenue attributable to the Assets
represents the fair market value of those Assets. The estimates for
reserves for individual properties may not reflect the same
confidence level as estimates of reserves for all properties due to
the effects of aggregation. The recovery and reserve estimates of
crude oil, NGL and natural gas reserves are estimates only and
there is no guarantee that the estimated reserves will be
recovered. Actual reserves may be greater than or less than the
estimates relied upon for NPV calculations, herein.
SOURCE Tuktu Resources Ltd.