Prospera Energy Inc.
Luseland, Cuthbert, Hearts Hill, Saskatchewan
In June 2018, Prospera purchased a 20% interest in three producing properties in Saskatchewan and Alberta. The assets are high working interest producing oil (~94%) and natural gas (~6%) interests in southwest Saskatchewan (Luseland, Hearts Hill and Cuthbert) and eastern Alberta (Cuthbert), Prospera was transaction lead, having initiated and concluded arrangements, but was significantly supported by an arm's-length private company participant which was responsible for 80% of the approximate $5.4 million transaction (net to Prospera Energy Inc. approximately $1.1 million). In December 2018, Prospera purchased an additional 15% interest in the three areas from the arms length partner, bringing its current working interest to 35%. Prospera Energy Inc. is the operator of the wells and has entered into a Joint Operating Agreement with its joint venture partners.
The properties consist of a total of 64 sections of land (approximately 41,526 acres and 62 net sections) with an average 96.6% working interest. Approximately 94% of the land is located in Saskatchewan. There are 240 oil wells and 12 natural gas wells producing on the properties. Prospera Energy Inc. believes that a number of suspended wells have potential for reactivation and accordingly, a review process has been initiated. There are also approximately 34 sections of undeveloped land.
Prospera has an option from a joint venture partner to acquire an additional 10% working interest in the assets for $1.25 million. This option can be exercised for a period of 18 months following closing of the original transaction.
Prospera also has a second option to acquire a further 10% working interest in the assets from a joint venture partner for $1.5 million. This option may be exercised before April 1, 2020, with an effective date being the date of the option exercise.
Prospera Energy Inc. believes that there is significant opportunity to reduce operating expenditures and increase production beyond primary recovery through the implementation of water flood/pressure support as well as numerous reactivations and infill drilling opportunities which may significantly extend the life and increase recoverable reserves from these properties.
Red Earth, Alberta
Red Earth is a 100% owned asset in northern Alberta, currently producing ~50bopd. Prospera owns one section of land with six current producing wells and a single water injector. Five wells produce from the Granite Wash formation and a single horizontal well produces from the Slave Point formation.
In May 2018, Prospera completed the construction of a battery to begin a water flood. The operation of the battery has significantly reduced lifting costs in Red Earth and has allowed for a stronger handle on measurement and sales. In addition, Prospera now has control over the sale of oil.
Four of the Granite wash wells are below 25% water cut and the fifth is above 90%, having become a solid source of injection water. It is believed that this well is stratigraphically separated from the other producers, and there is an expectation that overall production in the field will begin to increase with pressure support sometime in 2019.
As at January 2019, the LMR at Red Earth remains strong at 1.79.
Pouce Coupe, Alberta
The Pouce Coupe property is a single section with three producing wells. Prospera operates two of the wells and has a 52% working interest. Prospera owns a 50% working interest in the third well which is operated by another producer in the area. Total net production from Pouce Coupe is ~10bopd plus a small amount of gas, and the wells show very little decline year over year. Prospera will continue to produce the area for generation of cash flow
Prospera owns a 6% working interest in this pooled asset in Saskatchewan producing from the General Petroleum formation. Husky Oil operates the pool, and net production is approximately ~30boepd with about 98% being oil production. There are ten producing wells on the property and it is considered to be fully developed. Prospera will continue to produce the area for generation of cash flow.