Production Canada

EnerCam Purchases Oil Production in Evesham Canada

Upon completion of the gas capture project involving 26 producing wells and capturing the gas emissions and measuring the carbons captured on the project, EnerCam saw a natural progression to pursue and purchase a portion of the oil production and water disposal operations from the same 26 wells.

In Q3 of 2023, EnerCam negotiated with Eyehill Creek Exploration Ltd. (“Eyehill”), the Operator, to acquire a 40% minority position of the Evesham/Macklin production play to include all trucks, water disposal assets, and production oil, as well as folding the gas capture operations  into the transaction.  An independent valuation of the project was completed by GLJ Petroleum Consultants which indicated the following:

• Proved Developed Producing (“PDP”) oil reserves at 376,300 Barrels of oil equivalent (“BOE”) and gas reserves at 95 million cubic feet from the Project.
• Additional Probable Reserves add 109,000 BOE and 28 million cubic feet of gas to provide Total Proven and Probable (“TPP”) of 485,000 BOE and 123 million cubic feet of gas.
• The report indicates a Net Present Value (“NPV”) of PDP with a 10% discount to be $11,171,000 and a NPV of TPP with a 10% discount of $13,930,000 (excerpt from report below).
• GLJ tracked a historical 10-year period up to September 2023 and forecasted a period to September 2033.
• The report was completed in accordance with National Instrument (“NI”) 51-101 of the Standards of Disclosure for Oil & Gas Activities.

After completion of regulatory and legal requirements, the acquisition by EnerCam was completed based on the valuation of the total Project at $11,500,000, making the purchase price of the 40% interest with adjustments at $4,392,000 (all values in CAD).  The points regarding financial criteria included:

• The Funding for the Acquisition was a loan of $4,840,000 from a private lender to EnerCam, and the acquired 40% interest is the security held by the Lender. Repayment terms of interest and principal are over a ten- year period, at 10% interest, payable monthly, and adjusted every three years. The Lender is also entitled to 20% of all potential carbon credits on the Project for the life of the Project.
• The loan included $540,000 of debt repayment which was previously in place from the Lender for costs of the original gas capture project and additional workovers and improvements to the pipelines, infrastructure, and equipment.
• The Project produces in excess of 225 barrels of oil produced daily (“BOPD”). The most recent lifting costs (costs of production before taxes) are below $24 per barrel.
• Effective date for production allocation post-transaction was November 1, 2023.
• No finder’s fee was paid in regard to the transaction.
• One of the two vendor companies, 358140, has a 50% shareholder who is a related party to ANGKOR.
• Eyehill continues to be the Operator for the Project.

The production zone of 32 of the 33 wells is in the Mannville Sparky formation. One well is producing from the Cummings formation. The earliest of the wells started producing in 2001; the original field of 30 wells was completely shut in 2018 and the Eyehill and 358140 teams acquired the project to refurbish, rebuild, and restart production in 2019. They added several other wells to the Project as they advanced production. The Mannville is known to have multi-zone potential in the area and the company will continue to evaluate additional production opportunities as they arise.

Because there was no reinjection of the water during the years of 2001 – 2017 by the previous operator, Eyehill has applied for and received permits for waterflood which is taking low producing or non-productive wells and converting them to water injection sites so water coming out of the reservoir is replaced to maintain pressure.   The Operator initially added a water injection well in April 2024 as a test and found surrounding oil production increased up to 40%.   Eyehill is undertaking multiple sites for increased water injection in the fall of 2024.

Cash from monthly sales is generally received 60 days after the month end of production sales.  The chart below depicts the project financial data and the amount of the net deposit for EnerCam based on its 40% interest.