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Cuda Oil and Gas to sell Quebec assets for $10.59 million
Cuda Oil and Gas Inc. has entered into a series of binding Asset Purchase Agreements to sell all of its oil and gas assets and related liabilities located in the Province of Quebec at a total transaction value of CAD$10.59 million, including cash consideration at closing of CAD $4.29 million, to arm's-length purchasers. The Transaction is anticipated to close on or about August 30, 2019.
- Cuda will dispose of all of its petroleum and natural gas rights in Quebec which includes all land permits, licenses and production rights and interests in the Province as well as all tangible assets including drilling and related equipment associated with the Assets;
- The purchasers will assume all environmental liabilities, including abandonment and reclamation obligations, associated with the Assets in Quebec, estimated by the parties at CAD $3.2 million;
- The purchasers will pay CAD $4.29 million to Cuda in cash consideration; and
- The purchasers will cause Cuda to be released and discharged, at closing, from a pending CAD $3.1 million claim associated with the exercise of dissent rights in connection with the plan of arrangement of the Company completed August 15, 2018.
This Transaction is subject to normal closing conditions and regulatory approvals, including the approval by the TSX Venture Exchange
KES 7 Capital Inc. ("KES 7") acted as a financial advisor to the Company. Pursuant to TSXV requirements, KES 7 has confirmed that it is an arm's-length party to Cuda and the purchasers.
Glenn Dawson, President and Chief Executive Officer of Cuda stated: "This is a significant transaction for Cuda shareholders in its magnitude and strategic creation of a pure play company in the Powder River Basin which has been described as the 'Permian of the Rockies'.
"Moving forward, Cuda will focus on development of the Company's high netback conventional light oil assets and Secondary Recovery Miscible Gas Flood in Converse County, Wyoming. Cuda's contiguous Powder River Basin lands contain multiple defined opportunities to access and develop low risk proven conventional reservoirs.
"Additionally, light oil charged unconventional reservoirs within the Cretaceous Stack are highly prospective. Economic horizontal drilling exploitation opportunities are being matured across the Basin by major operators."
At year-end 2018, Cuda's independent reserves evaluator, Ryder Scott, assigned significant light oil reserves to the Company. The reserves evaluation was prepared in accordance with the definitions, standards and procedures contained in the COGE Handbook and NI 51-101 - Standards of Disclosure for Oil and Gas Activities. Summary reserves information for the Company's Proven Developed Producing ("PDP") and Proved Non Producing ("PNP"), Total Proved ("1P"), and Proved plus Probable ("2P") Reserves is provided below. No reserves were assigned to the Assets and all of the reserves were assigned to the Company's remaining Alberta and Wyoming assets.
Reserves at December 31, 2018:
- PDP + PNP is 1,534 mboe (62 % oil & liquids)
- 1P is 4,949 mboe (84 % oil & liquids)
- 2P is 14,571 mboe (84% oil & liquids)
Reserve Value at December 31, 2018 (before tax discounted at 10%):
- PDP + PNP is $26.8 Million
- 1P is $77.8 Million
- 2P is $191.6 Million
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