If you want to find someone eternally bullish about the Saskatchewan oil and gas sector, just sit down a few minutes with Del Mondor, owner of Aldon Oils, a private, Weyburn-based producer.
After all, you’d have to be bullish to be buying right now, which he is.
In the late spring he picked up 350 bbls/d of production from Enerplus, a transaction valued at $9.6 million, according to the company’s second-quarter report.
The deal for three properties was marketed by Sayer Energy Advisors in Calgary, Mondor told Pipeline News.
“I understand it was a fairly competitive offering, and we were the winners,” he said.
There were about 65 wells in all. “There’s a mixture. There’s a few shut-ins, a few disposals, a couple injectors, lots of verticals and horizontals.
“Honestly, I’ve been driving by these assets since I was 18 years old, kind of dreaming of owning them one day,” he said with a smile.
“I would think that kind of makes me bizarre, 18 years old, thinking of owning oil assets.”
The properties are next to Tatagawa, Colgate, and an Enerplus’ piece of the Whitecap-operated Weyburn unit. This increases Aldon’s ownership in the Weyburn Unit, but it’s quite a small fraction, nonetheless.
The deal started with Aldon “hearing rumblings of them selling” earlier in the year. They evaluated the properties, like they do so many times. “And so many times, disappointed, but in this particular case, they gave us a call back, and we got the deal done,” Mondor said.
Competitiveness
Aldon Oils remains bullish on the oil business “despite Saskatchewan having issues with competitiveness, and some of the negativity that we are seeing,” Mondor said.
While he’s confident enough to put his money down to buy additional oil wells, that doesn’t mean there isn’t a level of frustration with moves governments have made reducing the competitiveness of the industry.
“The governments of the day, at all levels, are so focussed on the liabilities, and the negativity of what’s going on, that it’s getting in front of the underlying value of the assets,” he said.
“The policies of the governments of the day are pushing companies into bankruptcy, and making the liability issue even worse. Rather than supporting these resource companies, and working with them, we hang all these deposits and all this liability first policy in front of all of them. Thus, it becomes a self-fulfilling prophecy.
Morton said that Aldon Oils wouldn’t have been created if these policies had been in place.
“When my dad first started in this business, picking up old wells, making them better, doing the proper work to get these things producing oil and creating employment. Guess what? Technology changed, and we started drilling horizontal wells next to these old wells that my dad was so smart about bringing back up. If we had these policies, back in the day, Aldon oils would have never started. It wouldn’t be 450 wells today.”
Asked about talks between Saskatchewan Headquartered Oil Producers (SHOP), an informal group of junior oil producers, and the Ministry of Energy and Resources regarding regulatory competitiveness, Mondor said, “The ministry is taking steps, and they promised us to address Saskatchewan’s competitive issues. And I think they’re taking it seriously, but there’s a level of frustration between SHOP members, the other people that are right on top of it in southeast Saskatchewan, southwest Saskatchewan, and other areas. Over-regulation and rural municipality taxation are really forcing us to take our minds and hands off the prize of drilling for and producing more oil.”
All this leads to confusion, and confusion in the industry is not a good thing, he noted, as it results in companies not spending. But he is drilling right now at Lampman. And he sees future development and drilling in the newly acquired former Enerplus properties.
“We’re going to work at it, and put our people on it and try to make things better and manager our asset. We will be doing some drilling. We’ll be doing some conversions. And we are expanding the waterflood. That’s why we bought it.”
— Pipeline News
