Hillcrest Petroleum Increases its Working Interest in the West Hazel Field to 100%
Canadian oil & gas producer Hillcrest Petroleum Ltd. has entered into an agreement with its unnamed joint venture partner to acquire the remaining working interest in the West Hazel field and increase its stake to 100% for a total stock consideration of C$150,000.
Under the terms of the deal, Hillcrest will acquire the remaining interest in the field in exchange for the issuance of three million Hillcrest common shares, representing a value of C$150,000. <Hillcrest had previously paid 100% of production re-activation costs from the field, on the agreement that it would receive 75% of revenues until re-activation costs were recovered, and a 50% share of revenues afterwards. The unnamed partner’s interest was 25% before the payout and 50% after the payout.>
The West Hazel field is located in western Saskatchewan and contains four wells that were re-entered and returned to production during 2019 after being shut in for four years. However, due to the impact of Covid-19 on oil prices and global oil demand, the field was briefly shut in April and May 2020. It resumed production in July.
Hillcrest also announced that it has been offered terms for a C$5.0 million debt facility to fund the development activities in the field to its full potential. The company intends to increase oil production by re-completing uphole in a number of wells subject to securing funding and acquiring the remaining ownership interest in the field.
“This is an important milestone in Hillcrest’s West Hazel development plans. Hillcrest has completed various technical reviews which allows us to proceed with field development activities to increase production and revenues and maximize reserves recovery. We estimate the field production could be increased to more than 500 barrels per day,” said Don Currie, Hillcrest’s CEO.
The transaction is subject to customary closing conditions, including the receipt of approval from the TSX Venture Exchange, and is effective as of July 29th.