POU/VII: Another Montney Deal In Chinook's (CKE) Core Area Paramount (POU) sold last week its Montney assets in Kakwa/Musreau to Seven Generations (VII) for C$1.9 billion.
Production was 30,000 boepd (~70% natural gas).
2P Reserves were 295 MMboe (~70% natural gas).
Key acquisition metrics: C$63,300/boepd and C$6.44/MMboe.
CKE's Montney assets are in Birley/Umbach and Gold Creek. Karr/Gold Creek area is located directly north of the divested Kakwa/Musreau assets and boasts condensate yields of approximately 76 Bbl/MMcf and per well economics similar to that of the Kakwa/Musreau Montney, according to POU's news.
So if you buy CKE at 50 cents per share, you pay just C$80 million Enterprise Value (CKE has about C$25 million cash) and you get:
- A 70% stake in Tournament which is currently valued at least C$140 million because Tournament's total current Enterprise Value is about C$200 million. After buying CKE's assets, Tournament produces 5,041 boepd (34% oil) and holds 21.2 MMboe. See CKE's news.
- Operatorship because CKE is the operator of its Montney assets in Birley and Gold Creek.
- 122 net sections in Montney in Birley and Gold Creek areas with 2,700 boepd and 18.3 MMboe 2P reserves.
So actually, if you buy CKE at 50 cents per share, you pay only for 40% of CKE's stake in Tournament. And you get all the producing Montney assets and the remaining 30% stake in Tournament for free.
To say it differently, at 50 cents per share, CKE's Montney assets trade at just C$29,600/boepd and C$4.3/boe. And you also get CKE's entire stake (70%) in Tournament for free.