TSXV:RZE.H - Post by User
Post by
InvestLargeCon Apr 20, 2017 9:38am
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Post# 26142056
Financings at $3-$3.25, Insiders Buy, Leverage 1.2x, Montney
Financings at $3-$3.25, Insiders Buy, Leverage 1.2x, Montney Accretive acquisition with low decline oil-weighted assets and Montney exposure while insiders participate in the offerings:
" Directors and officers of the Corporation are expected to participate in the Prospectus Offering in the aggregate amount of approximately $750,000."
Also, leverage is at just 1.2 times, according to the revised guidance proforma the deal:
Exit Net Debt to 2017 FFO1 | 1.2x |
THE ACQUISITION
The Acquisition is complementary on a geographic, geological and operational basis and in terms of product mix with Razor's current assets and operations in the Swan Hills areas. On a pro forma basis, using February 2017 field estimated production, the Company is expected to have production in excess of 3,700 boe/d, of which 85% is light oil and natural gas liquids.
The Acquisition enhances Razor's existing asset base with similar reactivation and re-entry opportunities, in addition to future drilling upside with proven deliverability of light oil from the Montney formation. The primary fields within the Assets include Kaybob South Triassic Units No. 1 and 2, Kaybob BHL (Beaver Hill Lake) Unit No. 1 and Simonette/Karr BHL (Beaver Hill Lake) Oil Pools.
With 95,679 (33,542 net) of acres of land, the majority of which is held by production, Razor foresees ample drilling opportunities comprised of both vertical and horizontal wells. Management has currently identified over 15 net drilling locations including the potential for future horizontal targets. The development of these properties is expected to be part of the 2018 capital program.
The Acquisition is expected to close on or before May 24, 2017, with an effective date of January 1, 2017.
ASSET SUMMARY
| Total purchase price1 | $9.6 million |
| Current production (Feb 2017 field) | 759 boe/d |
| Annual decline rate | 15% |
| Land | 95,679 (33,542 net) acres |
| Net locations | 15 unbooked |
| | |
| Forecast 2017 operating netback2 | $11.87 /boe |
| Reserves (Gross) | |
| | Proved developed producing ("PDP") reserves3 | 1.5 MMboe |
| | Total Proved ("TP") reserves3 | 2.8 MMboe |
| | Total proved plus probable ("P+P") reserves3 | 3.7 MMboe |
| | P+P RLI4 | 13 years |
| Reserves Value Before Tax (PV10) 3: | |
| | PDP reserve value | $22.5 million |
| | TP reserve value | $36.2 million |
| | P+P reserve value | $44.7 million |
| Run rate cash flow5 | $3.3 million |
ACQUISITION METRICS
| Current production (Feb 2017 field) | $12,652 per boe/d |
| Proved developed producing reserves3 | $6.46 per boe |
| Total proved reserves3 | $3.48 per boe |
| Total proved plus probable reserves3 | $2.62 per boe |
| Purchase price / PDP reserve value | 43% |
| Purchase price / TP reserve value | 27% |
| Purchase price / P+P reserve value | 21% |
| Run rate cash flow5 | 2.87x |