Waterous Energy Fund-backed oil and gas firm Strath Resources has acquired oil and gas properties and related infrastructure at Resthaven/Jayar in the Kakwa region, Canada from Paramount Resources for C$340m ($258.17m).
Image: An onshore oil drilling platform. Photo: courtesy of Dani Simmonds/Freeimages.com.
The acquisition is a part of Strath Resources’ strategy to expand its position in the Montney play.
The assets acquired by Strath under the cash-cum-stock deal, which was signed in June 2018, include: 201 (152 net) sections of land, with proved reserves of around 6.3MMBoe and proved plus probable reserves of about 8.1MMBoe, as of 31 December, 2017.
Paramount Resources said in a statement: “Expected second half 2018 production from the Assets was approximately 5,000 Boe/d (36% liquids), and accordingly, Paramount is revising its 2018 production guidance to be approximately 90,000 Boe/d (~ 37% liquids).”
Strath earlier said that the acquisition of the assets will directly offset and complement its existing Kakwa property in Alberta.
As a result of the deal, Paramount Resources has received a cash payment of C$170m (129.08m) and 85 million Strath common shares in addition to 10-year warrants to buy 8.5 million Strath common shares.
Paramount Resources earlier said assets being sold are no longer important for its business and the sale allows it to focus on developing its core Montney assets at Karr and Wapiti in the Grande Prairie Region and Montney and Duvernay assets in the Kaybob Region.
The sale is also expected to allow the firm to capture the upside of Resthaven/Jayar through Strath’s development of the combined Montney asset-base in the area, Paramount noted.
Proceeds from the sale is planned to be used by Paramount Resources to partially fund its 2018 capital expenditure program. The firm is also assessing other non-core dispositions.
Paramount Resources corporate development vice-president Rodrigo Sousa earlier said: “We believe this transaction provides our shareholders with a compelling opportunity to realize meaningful value on our assets in the Resthaven / Jayar area.
“The cash consideration being received will be re-deployed to continue to develop and grow production from our core assets and further strengthens our already strong balance sheet and liquidity position.”