Kelt Exploration Ltd. (“Kelt” or the “Company”) has entered into a definitive purchase and sale agreement to dispose of oil and gas assets in the Karr area of Alberta. The effective adjustment date of the disposition is January 1, 2017 and closing is expected to occur on or about January 18, 2017. The gross proceeds payable to Kelt, prior to adjustments at closing, will be $100.0 million. The purchaser has provided Kelt with a deposit in the amount of $10.0 million that will be held in escrow until closing.
DIVESTMENT PROPERTY ATTRIBUTES
- At December 31, 2015, as evaluated by Sproule Associates Limited, proved reserves were 5.1 million BOE ($47.9 million of FDC required to develop proved reserves) and proved plus probable reserves were 12.7 million BOE ($113.3 million of FDC required to develop proved plus probable reserves) of which 34% were oil, 17% were NGLs and 49% were gas;
- Estimated average production for December 2016 based upon field reports was 1,303 BOE per day (34% oil, 16% NGLs and 50% gas);
- Land holdings include 16,480 gross acres (25.7 sections) and 16,400 net acres (25.6 sections) of which 9,920 gross acres (15.5 sections) and 9,840 net acres (15.4 sections) included Montney rights. Approximately 79% of net land holdings were classified as undeveloped by Kelt; and
- Tangible equipment includes a 100% interest in the Kelt Karr 10-21-65-3W6 oil battery and a 2.26% interest in the CNRL Karr 10-10-65-2W6 gas plant.
- Kelt commenced development pad drilling on its Montney oil play at Karr in December 2016 and has now rig released the first well located at 102/13-28-065-03W6. The purchaser of the Karr assets has agreed to take over the completion operations of this well upon closing.
- Kelt retains certain non-operated interests at Karr with current production of approximately 124 BOE per day and a 1.0% interest in the CNRL Karr 10-10-65-2W6 gas plant. The Company will endeavour to divest of these minor interests in the future.