Leucrotta Divests Non-Core Montney Assets in B.C.
TSX-V listed Leucrotta Exploration Inc. has entered into a definitive agreement with an unnamed, Alberta-based publicly-quoted oil & gas company to divest its non-strategic Montney land base in British Columbia for an aggregate consideration of C$30 million.
The assets divested include 10.25 net sections of Montney play properties in the Doe region of north-eastern British Columbia, comprising 5% of Leucrotta’s Montney land base, and include three producing gas wells and twenty-one undeveloped locations. The company stated that the acreage is located in the wet gas window and is not conducive to long well development, given its close proximity to acreage operated by other companies.
Total proved developed producing (PDP) and undeveloped 2P gas reserves attributable to the assets (as of December 31st, 2019) were 0.9 and 21.2 million barrels of oil equivalent (MMboe), respectively. Production from the acreage currently averages approximately 375 barrels of oil equivalent per day (boe/d), and the net cash flow in 2020 was C$0.7 million.
Leucrotta has also commenced a C$20 million bought deal financing by way of a short form prospectus offering, and a concurrent non-brokered private placement of C$2 million flow-through units of the company. Leucrotta intends to use a portion of the combined proceeds from the asset sale and the financing to advance the initiation of a pad development program in the high GOR (gas to oil ratio) light oil window of the Lower Montney play at its Mica Project, also located in NE British Columbia.
Calgary-based Leucrotta is focused on exploration and production activities targeting the Montney formation in the Dawson area of British Columbia. The company’s current acreage in the area is approximately 141 net sections of Montney land in Doe/Mica regions.
RBC Capital Markets is advising Leucrotta on the deal, and Haywood Securities is acting as a strategic advisor with respect to the deal as well as the financing.
The transaction, which is subject to customary closing conditions, is scheduled to close on or around April 1st, 2021.