Fairborne Energy has entered into agreements to divest two dry natural gas assets located in Alberta, Canada, for a total consideration of $189m.
The assets include the company’s greater Marlboro area, which covers Marlboro, McLeod and Westerose, and its shallow gas / coal bed methane assets in the Clive area.
Current daily production of the assets stands at approximately 8,700 barrels of oil equivalent per day (95% natural gas), 23.1 million barrels of oil equivalent of proved reserves and 32.8 million barrels of oil equivalent of proved plus probable reserves (93% natural gas), as evaluated by GLJ Petroleum Consultants.
The transaction, subject to regulatory closing conditions, is expected to occur by 1 October 2012. Proceeds from the transaction will be used to reduce the company’s bank debt amounting to 185m.
The company stated it will now focus on the delineation and exploitation of greater Harlech area, where it owns 312 gross (201 net) sections of land.
Post divestment, the company’s production will stand at 4,500 barrels of oil per day and it will initiate resource study of 131 million barrels of oil equivalent of economic contingent resource in its working interest share in the Cardium formation of its assets.
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By GlobalDataRemaining assets, post sale, have high condensate rich production with significant upside in a number of Cardium gas-condensate. The company will begin drilling of the Wilrich play at Harlech area.
FirstEnergy Capital and RBC Capital Markets were Fairborne Energy’s advisors during the transaction.
Interest in the Clive oil field will be retained by the company, work is currently underway at the site where work is progressing on a CO2 flood to capture remaining oil reserves.
In September 2012, the company will commence production from the Wild River which had been shut down owing to low gas prices.
The company’s board of directors initiated a strategic review process in March 2012 to investigate its asset portfolio.
