A new transaction in the Peace River oilsands region will increase Baytex Energy Corp.’s opportunity area by more than 100 percent.
The $65 million deal with an unnamed operator builds on the company’s 12-year presence in the region, where it has established a position defined by a unique extraction strategy.
“Through our innovative multi-lateral horizontal drilling and production techniques, the area is recognized as having some of the strongest capital efficiencies in the oil and gas industry and, over the years, has contributed significantly to our growth,” the company says.
“The assets are located immediately adjacent to our existing Peace River lands, add approximately 3,000 boe/d of production and more than double our land base in the area.”
The acquisition also includes about 3,000 boe/d of production that is currently shut-in due to regulatory requirements and economics, says Baytex, which recently started re-activating production on its own heavy oil wells that were shut in awaiting more favourable pricing.
“We estimate the total capital required to bring [the acquired shut-in] volumes back online to be approximately $30 million,” the company says, adding it expects to invest in the ramp-up over the next couple of years.
The acquisition also increases Baytex’s total drilling inventory at Peace River by 75 percent, to over 350 net wells. There is also potential for enhanced oil recovery and water flood operations in the future, the company says.
The transaction will be funded by a $100 million concurrent bought deal financing.