Whitebark Energy Ltd (ASX:WBE) continues to take steps aimed at retaining the Wizard Lake Oil & Gas Project in Alberta, Canada, as it maintains encouraging production rates.
Earlier in the year, the company’s 100%-owned Canadian subsidiary, Salt Bush Energy Ltd (SBE), filed a Notice of Intention to Make a Proposal pursuant to Subsection 50.4(1) of the Canadian Bankruptcy and Insolvency Act.
Whitebark intends to retain the Wizard Lake asset and, via its subsidiary Ironbark Energy (IBE), has bid C$2 million comprised of C$336,000 in cash and C$1,664,000 in forfeit of an existing loan made by Whitebark to SBE.
The process was initially open for a period until March 31, 2021, and was extended by a further 45 days to May 13, 2021, with no competing bids for the assets received during this time.
Whitebark is working through the process of asset reacquisition and transaction completion is expected on or around May 19, 2021 – subject to approval by the Court of Alberta and payment of C$336,000.
Production remained strong
During the March quarter, SBE continued to operate Wizard Lake in Canada and reported production of 8,768 barrels of oil and 102,417 metric cubic feet of gas, averaging 97 barrels of oil per day and 1,138 metric cubic feet/day of gas - equating to around 287 barrels of oil equivalent/day.
Over the final seven days of the quarter, production averaged 90 barrels of oil/day and 1,124 metric cubic feet/day which equates to 276 barrels of oil equivalent/day.
Receipts from customers during the March quarter were $935,000, up 27.6% compared to the December 2020 quarter, due to oil price increases and increased sales volumes.
Notably, well performance levelled out in the quarter due to improved wellbore management practices.
The company has also identified several opportunities to optimise the field through minimising overheads and stabilising production, and is investigating the preferred scenario going forward.
Additional mineral lease
During the quarter, SBE acquired the remaining interests in Wizard Lake it did not already own from the receiver of Point Loma Resources Inc (PLX), on the following key terms and conditions:
- The effective date of the transfer is June 8, 2020 (the date the receiver was appointed);
- SBE makes no further claims against PLX and releases PLX from paying the amount owed to SBE calculated by SBE to be C$996,481; and
- SBE assumes the assets on an ‘as is, where is’ basis.
The transaction is not subject to Alberta Energy Regulator (AER) approval, however the AER is required to approve the transfer of the two well licenses (Rex-1 and Rex-2).
Upon completion, SBE’s land position will increase to 6400 acres from 5632 acres prior to the transaction.
SBE now owns 100% of the Rex-1,2 & 3 wells and all associated facilities and infrastructure.
Strategic review underway
The company has conducted a strategic review (completed subsequent to end Q3 FY21) of the Wizard Lake Oil Field, which included a review of booked 1P and 2P reserves and resources; revisions are being audited by a SPE accredited competent person in Canada using May 2021 price assumptions, Opex and decline curves.
Whitebark will provide an update to shareholders once this process is complete.
Board and interim CEO
On March 3, 2021, Matthew White and Duncan Gordon were appointed to the board of Whitebark and David Messina and Stephen Keenihan resigned.
Subsequent to the end of the quarter, Dr Simon Brealey was appointed as interim chief executive officer, following the commencement of the strategic review.
The new board of directors is also re-assessing the Warro Gas Project in Western Australia to determine whether to retain or dispose of the asset.
Planned activities
In the June quarter, the company intends to finalise the acquisition of Wizard Lake in subsidiary Ironbark Energy.
Other planned activities include:
- Relocation of the Whitebark office and control of the administration and finance function from Perth to Adelaide;
- A review of operations, overheads and actions to tighten fiscal control and reduce expenses; and
- Establishment of new accounting system for the Australian parent and Whitebark subsidiaries.
The company’s cash balance as of March 31, 2021, was $633,000.