CALGARY, AB , Oct. 18, 2023 /CNW/ - Tuktu Resources Ltd. (" Tuktu " or the " Company ") (TSXV: TUK) is pleased to announce that on October 17, 2023 it entered into a purchase and sale agreement (the " PSA ") with an arm's length company (the " Vendor ") to purchase certain oil assets located in southern Alberta (the " Assets ") from the Vendor (the " Acquisition ").
In connection with the Acquisition, the Company entered into an engagement agreement with Research Capital Corporation, as the sole agent and sole bookrunner (the " Agent "), on a commercially reasonable efforts basis to conduct a brokered private placement of equity units of the Company (the " Units ") at a price of $0.06 per Unit (the " Issue Price ") for aggregate gross proceeds of up to $2,500,000 (collectively, the Offering and the Concurrent Placement, as each term is defined herein, being the " Private Placements "). Each Unit shall be comprised of one common share in the capital of the Company (a " Common Share ") and one Common Share purchase warrant of the Company (a " Warrant "). Each Warrant shall entitle the holder thereof to purchase one Common Share at an exercise price of $0.0975 for a period of 36 months from closing of the Private Placements. Further, the Company entered into a non-binding term sheet with the Lender (as defined below) to establish a credit facility.
ACQUISITION HIGHLIGHTS
Large Concentrated Land Positions within Economic Banff Light Oil Resource Play
- Land position of 29,685 gross (29,396 net) hectares in southern Alberta near to the Foothills.
- Highly synergistic with the acquired lands building on the Company's strategic land position in the southern Alberta Deep Basin and Foothills.
Large Drilling Inventory Provides Years of Growth Opportunity
- Targeting the Banff formation within mappable Enhanced Permeability Fairway (" EPF ") located close to regional scale faults.
- Certain wells within the EPF have achieved IP30 rates of >400 bbl/d of light oil, with a cumulative production of 450 Mbbls (1) .
- Tuktu has identified at least 30 gross unrisked drilling locations within this EPF on the lands being acquired pursuant to the Acquisition. This is in addition to 20+ inventory of unrisked drilling locations within the Company's current land holdings (2) .
High Quality Low Decline Light Oil Production
- Stable base production of approximately 165 bbl/d (4) ; 100% light oil with an average 33° API gravity.
- Estimated annual decline of 16%.
- Immediate low risk production growth with several well recompletion opportunities.
Long-Term Reserve Development Upside
- Estimated Acquisition Reserves and Net Present Value of Future Net Revenue (3)
- PDP 0.31 MMbbl, $5.5 million NPV10%
- TPP 2.1 MMbbl, $19.6 million NPV10%
- Southern Alberta acquisition announced March 21, 2023 (8)
- PDP 727 MBoe , $3.7 million NPV10%
- TPP 1,449 Mboe, $6.2 million NPV10%
- Southern Alberta oil acquisition, announced December 8, 2022 (7)
- PDP 27 MBoe , $0.6 million NPV10%
- TPP 1,329 Mboe, $35.1 million NPV10%
Establishes a Growth Platform
- Combined production on a pro forma basis of 565 BOE/d (4) .
- Pro forma land position in southern Alberta core area of 41,048 gross (40,118 net) hectares.
Recompletion and Workover Program Targeting Increase in Corporate Production
Tuktu has assembled a portfolio of opportunities, including well recompletions and production optimization projects which are anticipated to occur late Q4 2023, or early 2024 (6) . These projects are targeted at increasing the Company's production and may include some or all of the following:
- Artificial lift installation on a Foothills oil well which is currently producing unassisted in a "free flow" state.
- A single standing well is contemplated to be completed for sweet gas. The targeted reservoir is in a structurally favourable position, and the log response is analogous to those of our current producing Foothills gas wells. A successful operation could add significant net production to the Company and delineate further offset drilling locations.
- Optimizations, recompletions and re-entries on the newly acquired assets have the potential to substantially increase the acquisition volumes being acquired. By utilizing existing wellbores for these opportunities, Tuktu is expecting to further decrease inactive liability and extend the life of the Assets.
While subject to further technical due diligence and planning, the Company is high grading projects with <1 year payout (5) . Together, low-cost completion and optimization initiatives have the potential to double the Company's total production.