Announcement to ASX 3 February 2021
Placement raises Funds for Borba Drilling and Production Growth
• $5,000,000 (before costs) raised from strongly supported placement.
• Proceeds to fund SGC share of costs of the imminent drilling of the Borba 1-7 well in California.
• Enhanced working capital for further enhancement of oil and gas production Also note drilling was stopped short of TD also, coming in under budget. RED earth assets purchase cost of 55cents per barrel proven. 15 to 30 years of field life left. Nov 2020 net back was between $5 and $10 per BOE, note oil price at that time was $34. Liability on field was around $31 million, i'm guessing that would shared between 3 so around $10.5 million for SGC taken over the field life of 15 to 30 years, $700,000 - $350,000 annually. Highwood Oil Company Ltd. announces the strategic divestiture of Red Earth Property
November 13, 20203:00 PM CNW
CALGARY, AB –
Highwood Oil Company Ltd., (“
HOCL“, “
Highwood” or the “
Company“) (
TSXV: HOCL) is pleased to announce that it has entered into an agreement with an arm’s-length
Alberta based, private oil and gas exploration and production company (the “
Purchaser“) to divest of the Company’s Red Earth field for a total transaction value of $2 million cash, prior to customary closing adjustments (the “
Divestiture“). As part of the Divestiture, the purchaser paid a
$200,000 non-refundable deposit into trust to be applied against the closing consideration. Current production from the Red Earth field is approximately 1,000 bbl/d of oil.
The Divestiture is closed into escrow subject to regulatory approval and license transfers. The Company anticipates closing conditions being satisfied in late January 2021. The effective date of the Divestiture is the closing date, being the 10th business day following the date upon which regulatory approval is received. The Divestiture does not include any working interest in the Company’s Wabasca Crude Oil Transmission Pipeline.
STRATEGIC RATIONALE
With the recent success of the Clearwater Fairway and its drilling program, the Company considered the Red Earth assets to be non-core in nature. The Divestiture allows the Company to remove approximately $30.0 million of undiscounted, uninflated decommissioning obligations from its schedule of liabilities. Highwood is focusing on the higher netback assets with lower operating costs.
ALBERT SOUTH ASSETS Located between Edmonton and the U.S. border, the assets consist of several reactivated oil and gas fields in the Little Bow, Taber and Bellshill areas, as well as associated production equipment.
Sacgasco paid a total of $510,000 in cash to Blue Sky Resources, which will act as the operator of the assets, and issued 1.92 million shares at a price of 7.3 cents each, valued at $140,000.
Current production is estimated at approximately 100 barrels of oil per day, and steps are now being taken to increase capacity to 500 barrels per day by the end of February at a cost of approximately $170,000 to Sacgasco.
Average production levels over the last five years — before production was shut-in as a result of the COVID-driven oil price collapse — was in excess of 2000 barrels of oil equivalent per day, and in 2019 the wells averaged roughly 1400 barrels of oil equivalent per day. Purchase price 64 cents per boe proven.
Zargon Oil & Gas Ltd. provides 2019 fourth quarter and full year financial results
Average field prices received during the fourth quarter were $54.57 per barrel for oil and liquids, an eight percent decrease compared to the 2019 third quarter and $2.34 per thousand cubic feet for natural gas, a 208 percent increase from the prior quarter. - Operating expenses were $4.69 million for the quarter, two percent higher than the third quarter of 2019. Transportation expenses were $0.11 million, a 16 percent decrease over the prior quarter. The quarterly increase in operating expenses was due to an increase in well repair and maintenance costs. On a per barrel of oil equivalent basis, operating expenses were essentially unchanged at $29.21 in the fourth quarter of 2019 compared to $29.27 in the prior quarter and transportation expenses decreased 17 percent to $0.67 from $0.81 in the prior quarter.
SUMMARY OF THE ZARGON PROPOSAL
The key provisions of the Zargon Proposal are as follows:
1. Secured creditors are unaffected creditors;
2. Blue Sky Resources Ltd. (“Blue Sky”) will sponsor the Zargon Proposal by contributing
$500,000 (the “Proposal Fund”) for distribution to proven Zargon preferred and ordinary
unsecured creditors. The Administrative Charge and the Interim Financing Charge do
not attach to the Proposal Fund;
3. Payment in full (subject to the OSB levy) will be made to proven Zargon preferred
creditors (as defined in the BIA);4. Payment of dividends to proven Zargon ordinary unsecured creditors (subject to the
OSB levy) will be made on a pro rata basis from the amount remaining in the Proposal
Fund after the payment of preferred creditor claims;
5. Blue Sky will issue to each Zargon creditor that receives a dividend in point 3 above, a
pro rata share of a $500,000 Contingent Value Note, as defined in the Zargon Proposal.
This Contingent Value Note will only become payable should the daily West Texas
Intermediate index average be equal to or exceed US$57.50/BBL for a trailing twelve
month period. The Contingent Value Note expires on September 1, 2024. BlueSky will
be responsible for monitoring the obligations of the Contingent Value Note and any
related dividend (subject to the OSB levy);
6. All Zargon O&G shares will be redeemed as of the date of the implementation of the
Zargon Proposal; and
7. New Zargon O&G shares will be issued to Blue Sky giving Blue Sky 100% ownership of
Zargon O&G after the implementation of the Zargon Proposal.
CAUSE OF FINANCIAL DIFFICULTY
Zargon’s cause of financial difficulty was due to the catastrophic collapse of world oil prices in the
spring of 2020 and the dramatic drop in oil and gas demand as a result of the COVID-19
pandemic. This resulted in all but two wells (the “Little Bow Wells”) being shut in by Zargon in the
spring of 2020. In November of 2020, one of the Little Bow Wells was also shut in and
02/11/32/14/W4 is the lone well that remains in production. Reason for getting out. I am unsure of the liabilitys, ABC assets On 27 April 2021, the Company reported that it had signed an agreement to acquire 25% of Blue Sky’s
Working Interest (“WI”) in oil and gas producing asset in Alberta and British Columbia, Canada (the
“ABC Assets”). The ABC Assets consist of non-operated WI and Royalty Interests in 31 gas and oil
fields and associated infrastructure. This i will have to wait for more details.
