Wizard Lake oilfield is located in Canada. Credit: Whitebark Energy.

Whitebark Energy’s wholly-owned subsidiary Salt Bush Energy (SBE) has terminated the definitive agreement to acquire the residual 40% interest of the Wizard Lake Oilfield in Canada.

Due to the current market conditions, Whitebark has served notice to terminate the agreement and will remain with a 60% interest and operatorship in the field.

As per the terms of the ongoing payback arrangements associated with the 2019 farm-in agreement and Wizard Lake joint operating deal, Whitebark’s subsidiary will continue to receive 85%-100% of field income until all pro-rata past costs are recovered.

Under existing agreements, SBE has the first right of refusal on any sale of the 40% interest it does not own in the oilfield.

Whitebark Energy managing director David Messina said: “The market has changed materially over the last two months and while our focus remains on Wizard Lake, it is clearly not the time to undertake this transaction.”

Last week, Whitebark revealed it was combating low oil prices and the concurrent coronavirus (Covid-19) pandemic by cutting overhead costs, which includes a reduction in directors’ fees and salaries by 50%. This would be effective from 15 April.

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In November last year, the company announced the completion of drilling at Rex­3, which is the third horizontal well to be drilled in the multi­-well development of the Wizard Lake Oilfield.

Whitebark Energy noted that the Rex-1 well at Wizard Lake Project started production in June last year.

Whitebark is an oil and gas production and exploration company with operations in Canada and Western Australia.