CALGARY, AB, Jan. 4, 2021 /CNW/ - Topaz Energy Corp.
(TSX: TPZ) ("Topaz" or the "Company") is pleased to announce the
completion of two previously announced gross overriding royalty
acquisitions which enhance Topaz's future growth outlook and
demonstrate the Company's growth strategy to acquire
value-enhancing assets from high-quality strategic partners that
are accretive on a per share basis. The acquisitions were
funded from the Company's available cash on hand.
DEEP BASIN ROYALTY ACQUISITION
Topaz acquired a newly-created gross overriding royalty interest
on natural gas, crude oil, and condensate production on over
720,000 gross acres of Tourmaline Oil Corp.'s ("Tourmaline")
developed and undeveloped lands in the Alberta Deep Basin ("Deep
Basin"), which is contiguous with Topaz's existing Deep Basin
royalty interest acreage, for total cash consideration of
$130 million ("Deep Basin Royalty
Acquisition"). Current production from the Deep Basin Royalty
Acquisition lands is estimated by Tourmaline at 76,000 boe/d which
Tourmaline expects will increase to 85,000 boe/d over the next two
years in conjunction with an estimated $300
million expansion of its capital plan over the next two
years. Tourmaline is currently operating three active drilling
rigs on the Deep Basin Royalty Acquisition lands.
Pursuant to the Deep Basin Royalty Acquisition, Topaz acquired a
2% gross overriding royalty interest on natural gas production
until December 31, 2021; increasing
to a 3% gross overriding royalty interest on natural gas production
thereafter; and a 2.5% gross overriding royalty interest on crude
oil and condensate production from the lands. Topaz estimates that,
based on Tourmaline's estimated capital plan, the Deep Basin
Royalty Acquisition will provide royalty production growth of 12%
in 2021, and 24% in 2022.
CLEARWATER ROYALTY
ACQUISITION
Topaz acquired a newly-created gross overriding royalty interest
on predominantly crude oil production on approximately 61,000 gross
acres of Tamarack Valley Energy Ltd.'s ("Tamarack") developed and
undeveloped lands in the Clearwater area of Alberta ("Clearwater") for total cash
consideration of $16 million
("Clearwater Royalty Acquisition"). In addition, Tamarack has
provided a two year capital commitment of $80 million. The Clearwater has quickly emerged as one of
Canada's most economic oil
plays which provides high netbacks, quick economic payback.
Development of this play does not require any use of fresh water
volumes for completions and requires limited land use through
multi-well pad drilling. Tamarack is currently operating two
active drilling rigs on the Clearwater Royalty Acquisition
lands.
Current production from the Clearwater Royalty Acquisition lands
is estimated by Tamarack at 2,000 boe/d which Tamarack expects will
increase to 10,000 boe/d over the next three years in conjunction
with an expansion of its capital plan. Pursuant to the Clearwater
Royalty Acquisition, Topaz acquired a 2% gross overriding royalty
interest.
ABOUT THE COMPANY
Topaz is a unique royalty and energy infrastructure company
focused on generating free cash flow growth and paying reliable and
sustainable dividends to its shareholders, through its strategic
relationship with one of Canada's
largest natural gas producers, Tourmaline, an investment grade
senior Canadian E&P company, and leveraging industry
relationships to execute complementary acquisitions from other
high-quality energy companies, while maintaining its commitment to
environmental, social and governance best practices.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements and
information (collectively, "forward-looking statements") that
relate to the Company's current expectations, views of future
events or the Company's future performance. Any statements that
express, or involve discussions as to, expectations, beliefs,
plans, objectives, assumptions or future events or performance
(often, but not always, through the use of words or phrases such as
"will likely result", "are expected to", "expects", "will", "will
continue", "is anticipated", "anticipates", "believes",
"estimated", "intends", "plans", "forecast", "projection",
"strategy", "objective" and "outlook") are not historical facts and
may be forward-looking statements and may involve estimates,
assumptions and uncertainties which could cause actual results or
outcomes to differ materially from those expressed in such
forward-looking statements. No assurance can be given that these
expectations will prove to be correct and such forward-looking
statements included in this news release should not be unduly
relied upon. These statements speak only as of the date of this
news release. In addition, this news release may contain
forward-looking statements attributed to third-party industry
sources. Accordingly, any such forward-looking statements are
qualified in their entirety by reference to, and are accompanied
by, the information and factors discussed in this news release.
In particular and without limitation, this news release
contains forward-looking statements pertaining to the following:
expected increases in production from the Deep Basin Royalty
Acquisition and Clearwater Royalty Acquisition (together, the
"Royalty Acquisitions") lands and expansion of Tourmaline's and
Tamarack's capital plans over the next two and three years,
respectively; estimated royalty production growth from the Deep
Basin Royalty Acquisition in 2021 and 2022; other expected benefits
from the Royalty Acquisitions including enhancing Topaz's future
growth outlook and providing value enhancing assets that are
accretive on a per share basis; and the Company's business as
described under the heading "About the Company" above.
Forward–looking statements are based on a number of key assumptions
and expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control,
which could cause actual results and events to differ materially
from those that are disclosed in or implied by such forward–looking
statements. Such expectations and assumptions include the
following: prevailing and future commodity prices and currency
exchange rates; counterparty development plans and capital
expenditures on royalty lands; applicable tax laws; interest rates;
future well production rates; operating costs; the timing of
receipt of regulatory approvals; the success obtained by
counterparties in drilling new wells; anticipated timing and
results of counterparty capital expenditures; the state of the
economy and the oil and gas exploration and production business;
and the availability and cost of financing. Such risks and
uncertainties include, but are not limited to, the risks associated
with the oil and gas industry in general such as operational risks
in development, exploration and production; delays or changes in
plans with respect to exploration or development projects or
capital expenditures; the uncertainty of estimates and projections
relating to reserves, production, revenues, costs and expenses;
operational matters, including potential hazards inherent in the
Company's operations and the effectiveness of third-party health,
safety, environmental and integrity programs; risks arising from
co-ownership of facilities including reliance on third-party
operators; commodity price and exchange rate fluctuations; interest
rate fluctuations; marketing and transportation; environmental
risks; competition for, among other things, third-party capital and
acquisitions of additional assets; incorrect assessment of the
value of acquisitions; ability to access sufficient capital from
internal and external sources; failure to obtain required
regulatory and other approvals; and changes in legislation,
including but not limited to tax laws, royalties and environmental
regulations; the failure to realize some or all of the anticipated
benefits of the Royalty Acquisitions including estimated royalty
production growth, and the factors discussed under "Notice to
Investors – Forward-Looking Statements" and "Risk Factors" in the
supplemented PREP prospectus dated October
19, 2020. Readers are cautioned that the foregoing list of
factors is not exhaustive. Topaz does not undertake any obligation
to update such forward–looking statements, whether as a result of
new information, future events or otherwise, except as expressly
required by applicable law.
BOE EQUIVALENCY
Per barrel of oil equivalent amounts have been calculated using
a conversion rate of six thousand cubic feet of natural gas to one
barrel of oil equivalent (6:1). Barrel of oil equivalents
(boe) may be misleading, particularly if used in isolation. A
boe conversion ratio of 6 mcf:1 bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the
wellhead. In addition, as the value ratio between natural gas
and crude oil based on the current prices of natural gas and crude
oil is significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
INFORMATION REGARDING PUBLIC-ISSUER COUNTERPARTIES
Certain information contained in this news release relating to
the Company's public issuer counterparties which include Tourmaline
and Tamarack and the nature of their respective businesses is taken
from and based solely upon information published by such issuers.
The Company has not independently verified the accuracy or
completeness of any such information.
SOURCE Topaz Energy Corp