Oilprice.com has published an article this week by James Burgess, claiming the Montney formation, unlike many other natural gas and oil plays, continues to have robust economics — and is a highly attractive investment target of major producers.
It says the liquids-rich Montney play, which currently supports 30 percent of Canada’s gas production, is one of “The few islands of positive economic yield in a very challenged market.”
It goes on to suggest the current market turmoil has created a once in a generation opportunity for ‘savvy’ energy investors and despite per barrel oil prices still in the mid-$40 US range, the mergers and acquisitions market is heating up, especially in the liquids and condensate-rich Elmworth/Gold Creek corridor.
Mr. Burgess notes that last month Kicking Horse Energy, with a 75 percent interest in 21 sections in the condensate-rich Montney, was offered a buy-out price of about $356 million, by Calgary-based Orlen Upstream Canada Limited.
It’s a subsidiary of Poland’s state-controlled PKN Orlen S.A. which is one of Central Europe’s largest crude oil refiners and petro retailers.
The article also says there are two other Calgary exploration and production companies which stand as potential acquisition candidates for the majors, having built up large positions in the heart, of the Countries most economic corridors.
It identifies them as Blackbird Energy Incorporation and Leucrotta Exploration Incorporated.
It cites Blackbird as a potential target due to its 78 section land position at Elmworth — located in the Alberta Peace, about half way between Grande Prairie and Tumbler — and says Leucrotta is being targeted, because it has 172 net sections of land in the Dawson Montney area.
Mr. Burgess concludes by suggesting, “As condensate continues to drive economic returns in the Montney, the majors will only accelerate their plans to build, acquire and produce in these tightly bound corridors.”