VANCOUVER, BC, May 9, 2023
/CNW/ - Canada Energy Partners Inc. (NEX: CE.H) (the "Corporation"
or "Canada Energy") announces that the Corporation has determined
that a lower capital cost acquisition opportunity will satisfy the
current capital market appetite in the junior energy markets.
Accordingly, the Corporation has entered into a Participation
Agreement with Wandoo Energy LLC, a Texas based oil & gas company. The
Corporation's capital obligations under the Participation Agreement
are approximately US$1,000,000 to
acquire a 63% working interest. The capital contribution will be
applied to complete a workover program to produce natural gas and
condensate initially from an existing Lower Wilcox zone in Kuester
Ochoa No.1 well. The well is in the Kuester Ochoa gas unit (~555
acres), located in Lavaca county,
Texas, and part of the prolific
Wilcox proven production area. The
Texas Gulf coast area contains a vast network of substantial
pipelines, gas gathering systems and experienced workforce.
The Kuester Ochoa #1 well previously produced 2.89 BCF of
natural gas and 53,000 barrels of condensate from a deeper 19 foot
pay zone (Lower Wilcox 4). The workover will isolate the current
producing zone, and perforate and stimulate (FRAC) ~101 feet of net
pay identified at 11,408 – 11,569 ft (Lower Wilcox 0,1,2).
The Corporation's capital contributions will be expended as
follows:
Canada Energy's Costs
Borehole fee
|
|
US$225,000
|
Workover
cost
|
|
US$670,400
|
Facility
refurbishes
|
|
US$100,000
|
|
|
|
|
Total Cost
|
|
|
US$995,400
|
The initial production rates for the targeted zone (Lower Wilcox
0,1,2) are in the order of 5 – 7 MMsfc/day and 50 - 70
BC/day. These production rates would translate into monthly cash
flow for Canada Energy of approximately US$175,000.00 per month and a payback of the
~US$1,000,000 in invested capital of
7 - 9 months using conventional production forecast.
Canada Energy Partner's corporate growth plan calls for the
acquisition of several more of these low-cost, low-risk development
transactions in the Southern United
States region.
A portfolio of these workovers and development projects will
provide the strong cash flow base from which the Corporation can
begin its next stage of growth for the benefit of all its
shareholders.
Private Placement - CDN$2.0M
Canada Energy also announces a non-brokered private placement of
units to secure up to CDN$2,000,000.
Each unit will consist of one common share at an issuance price of
$0.05 and one-half warrant,
with a full warrant entitling the holder to acquire an additional
common share at an exercise price of $0.15 share for a period of 24 months. Canada
Energy may complete a closing under the unit financing at any time
prior to the closing under the Participation Agreement. The net
proceeds under the unit financing will be used to fund the
Corporation's obligations under the Participation Agreement and for
general working capital purposes. Subject to applicable
securities laws, eligible arm's length parties will be paid
customary finder's fees in connection with the private placement
representing an 8% cash commission and 8% finder's units.
Insiders will be eligible to participate in the private placement.
In light of the unit financing, the previously announced private
placement of convertible debentrues has been cancelled.
Completion of the Participation Agreement with Wandoo Energy LLC
as well as the private placement of units are subject to approval
of the TSX Venture Exchange.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as such term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
This press release contains forward-looking statements within
the meaning of applicable securities laws. Forward-looking
statements are frequently characterized by words such as "plan",
"expect", "project", "intend", "believe", "anticipate", "estimate"
and other similar words or statements that certain events or
conditions "may" or "will" occur, including, without limitation,
estimated revenues. Forward-looking statements in this press
release include statements about the anticipated filing deadline
for the Annual Filings. Forward-looking statements are subject to a
variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those
projected in the forward-looking statements. These factors include,
without limitation, the failure to file the Annual Filings by the
anticipated date. Readers are cautioned that reliance on such
information may not be appropriate for other purposes. The
forward-looking statements contained in this press release are made
as of the date hereof, and the Company undertakes no obligation to
update publicly or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, unless
so required by law.
SOURCE Canada Energy Partners Inc.