DEH CHO
The new owner of the Cameron Hills oil and gas play in the Deh Cho region is new to the NWT but not new to Northern operations.
Junior energy company Strategic Oil and Gas Ltd.'s Steen River operations in Alberta are located about 65 kilometres south of the Cameron Hills area in the Deh Cho region. - graphic courtesy Strategic Oil and Gas Ltd.
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Calgary-based Strategic Oil and Gas Ltd.'s flagship project, where the company is actively drilling and completing wells, is located just 65 kilometres south of Cameron Hills, across the border in northern Alberta.
The junior oil and gas company announced earlier this month that it acquired Paramount Resources Ltd.'s dwindling Cameron Hills project in the southeastern corner of the Deh Cho region, between Tathlina Lake and the NWT-Alberta border, in a $9-million deal that also includes the acquisition of Paramount's Bistcho Lake, Alta., assets, and infrastructure including Cameron Hills pipeline which carries oil and gas to a processing plant at Bistcho Lake.
Similar to the purchase of Cameron Hills -- an asset that Paramount had been losing interest in, having not drilled a new well in more than two years -- Strategic's flagship project at Steen River was also acquired with extensive infrastructure from an established energy producer, Gulf Canada Resources Ltd., which sold the oil and gas asset when it was far from depletion.
In the past two years, Strategic has grown production at Steen River to north of 3,000 barrels a day, from 300 barrels of oil per day, said vice-president of business development, Douglas Wright.
"We recognized there was something missed there," said Wright, recalling when Strategic took ownership of the Steen River asset, which had originally been developed for natural gas production in the 1990s, when gas was worth more relative to oil. "We recognized through our skillset here that there was a lot more oil there than what was being produced.
"If you look at what we did at Steen, where we took an asset that nobody was working on, and we've grown it from 300 barrels a day to north of 3,000 and it's still growing, we think there's similar opportunity there at Cameron."
Wright estimated production at Cameron is currently about 200 barrels per day of oil, and one to two million cubic feet of gas, but said it is too early to say how much the company anticipates it can grow production at Cameron.
Investors took notice of the junior energy company's acquisition of Paramount's assets, when shares of Calgary-based Strategic Oil and Gas Ltd., which were trading around $1.10 on the TSX Venture Exchange before the deal was announced on March 4, surged 13 per cent, and March 13, remained at $1.28 on the TSX Venture Exchange.
"We were able to buy these assets at very good metrics and I think the surge is that they'd like to see us do the same thing there as we did at Steen, so it's a good platform to start with," Wright remarked about the stock activity.
The assets on the Alberta side of the border acquired as part of the deal with Paramount are where the company sees growth happening in the near term, he said, adding that activity at Cameron Hills will begin with re-evaluating and assessing the existing seismic work for the area, and utilizing the company's subsurface skills, including geological, geophysical and reservoir engineering.
A number of open land use permits and open water licences for Cameron Hills are still held by Paramount, according to the Mackenzie Valley Land and Water Board.
When a company comes under new ownership, the new owner must apply to have the existing land use permits and/or water licences transferred or "assigned" to the new company, according to board spokesperson Jonathan Churcher, who added that any security required under the existing permits and licences must be submitted by the new owner before the board can assign the permits and licences.
The board had not yet received an application for assignment for the transfer of permits and licences from Paramount to Strategic Oil and Gas by March 13, Churcher told News/North.
Strategic has met with the National Energy Board and is not yet certain of the regulatory process in the NWT, Wright said.
"Although we're used to working in a Northern environment, the regulatory environment is definitely different," he said, adding that it is not necessarily worrisome for the company. "As long as you establish the relationships and understand the rules, it should not be a problem for any company. We're just getting our feet wet here."
Wright said Strategic is working with Paramount and has an agreement that implies that Paramount will help guide the junior company for up to a year.
News/North was not able to reach a Paramount representative for comment, but a March 8 news release announced that Jim Riddell, president and chief operating officer of Paramount Resources Ltd., has been appointed to Strategic's board of directors.
