Vermilion Energy Inc. has closed its acquisition of Westbrick Energy Ltd. and its assets in Canada’s Deep Basin.
The company said that the acquisition adds stable annual production of 50,000 barrels per day (boepd), consisting of 75 percent gas and 25 percent liquids, and approximately 1.1 million, or 770,000 net, acres of land in the southeast portion of the Deep Basin trend in Alberta, Canada.
The acquisition includes four operated gas plants with a total capacity of 102 million cubic feet per day (MMcfpd), Vermilion said in a news release.
“This footprint is contiguous and complementary to Vermilion’s legacy Deep Basin assets, providing significant operational and corporate synergies,” the company said.
Vermilion noted that it has identified over 700 future drilling locations on the acquired acreage, across multiple zones including the Ellerslie, Notikewin, Rock Creek, Falher, Cardium, Wilrich and Niton formations, with half-cycle internal rates of return ranging from 40 percent to over 100 percent based on expert estimates.
With this depth and quality of inventory, Vermilion said it expects the acquired assets to have the ability to maintain flat production for over 15 years while generating significant free cash flow to enhance the company’s long-term return of capital framework.
Included in the arrangement agreement was an option for Westbrick shareholders to elect to receive up to a maximum of 1.7 million Vermilion common shares not to exceed CAD 25 million in value as a portion of the total consideration. A number of shareholders of Westbrick have elected to receive Vermilion common shares totaling 1.1 million shares at a value of CAD 14.2 million, according to the release.
The remainder of the consideration for the acquisition will be paid in cash, funded through cash on hand, Vermilion’s new CAD 450 million term loan, and Vermilion’s undrawn CAD1.35 billion revolving credit facility, the company said.
Vermilion in September 2024 brought five wells online in its Mica Montney asset from the 9-21 pad drilled and completed in the same year. The wells produced at an average IP30 rate of over 1,000 boepd per well, consisting of 52 percent liquids. The total drill, complete and tie-in cost for the 9-21 pad was approximately CAD 9.6 million per well
In Germany, the company said it successfully completed testing operations on a deep gas exploration well. The well was completed in the Rotliegend zone at a depth of approximately 5,000 meters and flow tested at a restricted rate of 17 MMcfpd of natural gas with a wellhead pressure of 4,625 psi. Tie-in operations are progressing to bring the well into production in the first half of 2025, the company said, adding that it expects the well to produce into a third-party system at a restricted rate.
In Croatia, Vermilion also reported successfully increasing production on the SA-10 block after commissioning the gas plant in late June 2024, and production levels exceeded 2,000 boepd. The company said it plans to maintain production on the SA-10 block in future years to maximize free cashflow and has identified prospects for future development.
Source: By Rocky Teodoro from Rigzone.com