New company snaps up Shell assets
Alberta, B.C. sites go to Mapan
For the second time in two weeks a major producer is selling a package of natural gas-weighted assets to a Calgary company newly created to match the opportunity.
On Wednesday, privately owned Mapan Energy Ltd. announced it had struck a $132.5-million deal to buy from Shell Canada two packages of oil and gas assets in the Deep Basin of west central Alberta and northeastern B.C.
It added it will issue shares to buy Paris Energy Inc., an inactive Calgary company, to gain access to its stock listing on the TSX Venture Exchange. The name is expected to be changed to Mapan at a later date.
The Shell purchase was to be partly covered through a bought deal private placement of 57.5 million subscription receipts priced at $2 each through a syndicate of underwriters led by First Energy Capital and GMP Securities — later Wednesday, Mapan announced the deal had been upsized to 63.3 million receipts for gross proceeds of $126.6 million.
Mapan president and chief executive Dick Walls said the deal preceded the company.
“I began discussions with the vendor, which is Shell Canada Energy, last fall and the deal kind of came together earlier in the year,” he said in an interview. “So we put the team around the assets and Mapan was incorporated.”
The deal for the assets, which produce 90 per cent gas, has similarities with the $2-billion agreement to acquire Encana Corp.’ s Alberta Bighorn assets (75 per cent gas) by newly formed private company Jupiter Resources Inc. announced last week. In fact, Mapan’s chief operating officer, Michael Boyd, was until recently vice-president of Encana’s Bighorn unit, the company said.
Walls headed South Americafocused junior C&C Energia Ltd. until it was sold to Pacific Rubiales Energy Corp. in a stock swap deal worth about $626 million in 2012. Mapan chief financial officer Jennifer Dugdale was corporate controller at C&C.
Walls defended the decision to buy assets with a high gas weighting. Although a cold winter drew down North American reserves and boosted natural gas prices recently from sub-economic lows of the past few years, analysts say a glut of U.S. shale gas could return to again weigh on prices.
“I like gas,” Walls said. “I think we’re going to have another good cycle with gas. And our acquisition metrics were favourable so it was a good buy, a good set of assets with good upside.”
The properties add up to about 81,000 hectares, of which about 48,000 hectares are undeveloped.
Production so far this year is about 7,000 barrels of oil equivalent per day and average production for all of 2014 is expected to average 6,520 boe/d, Mapan said.
The deal includes about 250 kilometres of gas pipelines, field compression facilities with total net capacity of about 185 million cubic feet per day and long term gas processing arrangements at two major gas plants.
Shell Canada spokesman Cameron Yost confirmed the deal and said it involves lands with about 150 wells producing about 48 mmcf/d of gas and 215 boe/d of liquids.
“The opportunity to sell Deep Basin North and select acreages in Deep Basin East was unsolicited but aligns well with our business strategy of monetizing some of our dry gas assets and pursuing profitable growth in select liquid rich shale plays and integrated gas opportunities,” he said in an e-mail.
When the deal is done, Mapan said current Paris shareholders will own 2.2 per cent of the shares, 10.1 per cent will be held by current Mapan shareholders and 87.7 per cent will be held by subscribers to the private placement.
The transaction is expected to close July 31.