Lycos Energy Inc., Calgary, has agreed to acquire privately held Canadian heavy oil producer Durham Creek Exploration Ltd. (DECL), Calgary, for $22.5 million in a cash and stock deal.
Assets to be acquired include 35,382 net acres of land suitable for multi-lateral development near assets Lycos recently gained through acquisition of Wyatt Resources Ltd., another privately held heavy oil producer based in Calgary, the company said in a release Sept. 13. With both acquisitions, Lycos has increased its corporate land holdings by 31% to 147,956 net acres.
Within the DECL assets, Lycos said it has identified over 70 net Mannville heavy oil multi-lateral drilling locations.
The deal increases Tier 1 Mannville inventory (Rex, Waseca, GP, and Cummings) by 77% to 55 total net locations, Lycos said. Tier 2 Mannville inventory increases by 49% to 140.6 total net locations.
Acquired production is expected to average about 180 boe/d (99% crude oil) at deal close from a multi-lateral well drilled at Lindbergh. DCEL's first well targeting the Waseca formation achieved an IP30 of 183 boe/d. Initial drilling results support Lycos’ expectation that it will be able to deploys its’ multi-lateral/fishbone drilling technique to further develop the acquired lands.
The deal is expected to close on or before Oct. 16, 2023, subject to certain customary conditions and approvals, including the approval of the Court of King's Bench of Alberta and the TSX Venture Exchange.
Pro-forma the acquisition, Lycos is expected to increase its 2023 capital spending program to $57 million with the drilling of an additional 2-3 wells targeting DCEL's acreage in this year’s fourth quarter.
Full-year 2023 production guidance remains unchanged.
