Calgary– For a few years now, Husky Oil Operations Limited has been shifting towards thermal production of heavy oil. Now, with the lowest oil prices in 12 years, the company is selling off a large portion of its conventional assets, including a substantial portion in southern Saskatchewan.
The estimated bid date is mid-March 2016, after having been announced on Jan. 20.
There are three packages covering most of the western Canadian Sedimentary basin with the exclusion of the Lloydminster area, northern foothills and northeast Alberta. The “east package” includes all of southern Saskatchewan, divided up into Dodsland, southwest and southeast Saskatchewan. In this broader package, southwest Manitoba is included in the southeast Saskatchewan portion. Additionally, the region around Provost, Alta., is its own block with the east package.
The entire offering includes 59,530 boepd with a 54 per cent liquids rating. There are 4.77 million acres gross and 3.95 million acres net. Of the gross land, 58 per cent is developed, and of the net land, 59 per cent is developed.
The east package includes 23,500 boepd production for 2015. It is heavily weighted to liquids, at 88 per cent. The gross land is 1.1 million acres, net 970,000 acres. Of that, 52 per cent of the gross land is developed and 49 per cent of the net land is developed.
Southwest Saskatchewan
Up until a few years ago, Husky had been a regular driller in the southwest portion of Saskatchewan near Shaunavon. This area had production of approximately 13,230 boepd, of which 89 per cent is oil and liquids.
The listing says there are several large original oil in place (OOIP) reservoirs (10 – 200 million bbls) under waterflood or polymer flood with opportunities for optimization and expansion. It is mainly operated assets with consolidated lands and infrastructure. There is a substantial inventory of infill, pool extension, and play extension horizontal drilling opportunities.
The majority of lands are held by production. As well, there is 3D seismic coverage over large portion of the core land block.
Southeast Saskatchewan
Up until late 2014, Husky had been regularly drilling very close to the U.S. border in the Torquay and Oungre area, before laying down its rig when the downturn hit.
Production in southeast Saskatchewan accounts for approximately 2,340 boepd. That is 100 per cent oil and liquids.
The listing notes a substantial inventory of Bakken horizontal development drills with expanding inventory of Torquay horizontals.
There are also additional drilling (Frobisher, Midale, Ratcliffe formations) and waterflood optimization opportunities.
Dodsland
In the Dodsland area, in the Viking play, Husky’s production for sale amounts to approximately 2,020 boepd, of which 58 per cent is oil and liquids
Husky has high working interest, consolidated land positions in the Saskatchewan Viking play fairway. The drilling inventory of shallow, horizontal wells with favourable royalties, ranks among the most economic projects in Western Canada, according to the company.
Provost
Production of approximately 5,910 boepd, 93 per cent oil and liquids weighted, is up for sale in the Provost area of Alberta.
This is a consolidated land and infrastructure position, on-trend with stacked and adjacent Mannville and Viking oil pools. The area is known for shallow wells (700 – 900 metres) with low capital costs (less than $900,000), strong initial rates and good overall recoveries deliver early project payouts and compelling rates of return.
The package has a large inventory of horizontal and vertical drilling opportunities. The majority of lands are held by production.
