Through its subsidiary Winslow Resources, Return Energy Inc. acquired certain partner interests in the core gas production area of Rycroft, Alberta for a cash consideration worth $750,000.
The terms of the acquisition include production of around 60 barrels of oil equivalent per day (BOE/D), where 80% of it is natural gas, and 50% of the non-operated interest in Return Energy’s gas plant and gathering system in the area, making the company’s ownership of the facility 100%.
Commenting on the deal, Return Energy president and CEO Ken Tompson said:
“This consolidation of interests at Rycroft has been a key part of the development plan put in place since acquiring our Peace River Arch assets in October 2016. Sole ownership of the gas plant will give us greater flexibility and control over plant through-put, in addition to allowing for potential increased revenue derived from future processing of third-party volumes.”
Specifically, the company’s existing independent reserve report states that the acquisition includes proved developed oil reserves of 171,600 BOE and proved plus probable oil reserves of 228,400 BOE. As for the earnings before tax, the report stipulates that the net present value of future net revenue discounted at 10% equals $989,000 and $1,266,000 for the two types of reserves, respectively.
Moreover, the cash consideration of $750,000 is still subject to final adjustments.