Strategic Alternatives Process – Drakkar Energy Ltd./Blacksteel Energy Inc
April 15, 20207:57 AM BOE Report Staff
Drakkar Energy Ltd. (“Drakkar”) and Blacksteel Energy Inc. (“Blacksteel”) (TSX-V: BEY) (collectively the “Companies”) have a combined 100% working interest (70% Drakkar, 30% Blacksteel) in an oil and natural gas asset in the Girouxville area of northwestern Alberta (the “Property”). The Property is operated by Drakkar and is the sole asset of both Companies.
The Companies have engaged Sayer Energy Advisors to assist with a joint sales process whereby Drakkar and Blacksteel intend to both pursue a process to explore strategic alternatives. The Companies are open to reviewing all alternatives, with potential outcomes to this process including, but not limited to, a sale or merger of the Companies or other form of business combination; a recapitalization or other form of strategic investment; or the sale of the working interests in the Property.
Recent production net to the Companies from the Property has averaged approximately 41 barrels of oil per day.
As of April 4, 2020, Drakkar’s net deemed asset value associated with the Property was $2.2 million (deemed assets of $3,116,932 and deemed liabilities of $948,731), with an LMR ratio of 3.29.
Drakkar is a privately-held company with no staff or severance obligations, with all services being provided by contractors and no office lease obligation. Drakkar has estimated total tax pools of over $13.5 million as of June 30, 2019, including approximately $7.8 million in non-capital losses. Additional corporate information relating to Drakkar will be provided to parties once a confidentiality agreement has been signed.
Blacksteel is a publicly-traded company with no staff or severance obligations, with all services being provided by contractors, no office lease obligation and it currently has a working capital deficiency of approximately $1.8 million (which includes approximately $2.0 million of convertible debentures of which Blacksteel is currently pursuing a conversion to common shares or an extension of the term). Blacksteel had estimated total tax pools of over $9.8 million as of April 30, 2019, including approximately $4.3 million in non-capital losses.
GLJ Petroleum Consultants Ltd. (“GLJ”) prepared an independent reserves evaluation of the Girouxville property as part of Drakkar’s year-end reporting (the “Drakkar GLJ Report”). The Drakkar GLJ Report is effective December 31, 2018 using GLJ’s January 1, 2019 forecast pricing. GLJ estimates that, as of December 31, 2018, Drakkar’s 70% working interest in the Girouxville property contained remaining proved plus probable reserves of 1.1 million barrels of oil and natural gas liquids and 2.8 Bcf of natural gas (1.6 million boe) with an estimated net present value of $15.1 million using forecast pricing at a 10% discount.
GLJ prepared an independent reserves evaluation of the Girouxville property as part of the Blacksteel’s year-end reporting (the “Blacksteel GLJ Report”). The Blacksteel GLJ Report is effective April 30, 2019 using GLJ’s April 1, 2019 forecast pricing. GLJ estimates that, as of April 30, 2019, Blacksteel’s 30% working interest in the Girouxville property contained remaining proved plus probable reserves of 486,000 barrels of oil and natural gas liquids and 1.2 Bcf of natural gas (690,000 boe) with an estimated net present value of $6.1 million using forecast pricing at a 10% discount.
Offers relating to this strategic alternatives process will be accepted until 12:00 pm on Thursday, May 21, 2020.
For further information relating to this opportunity feel free to contact: Ben Rye, Grazina Palmer or Tom Pavic at 403.266.6133.