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    Canada’s Topaz Energy adds to royalty lands

Summary

Royalty company expects C$500mn of development spending in 2021, 2022.

by: Dale Lunan

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Complimentary, Natural Gas & LNG News, Americas, Corporate, Mergers & Acquisitions, News By Country, Canada

Canada’s Topaz Energy adds to royalty lands

Canadian royalty and infrastructure company Topaz Energy said May 3 it has reached a definitive agreement with Reserve Royalty Income Trust to acquire all of its subsidiaries for about C$26mn (US$21.1mn), payable through the issuance of nearly 1.8mn Topaz shares.

The acquisition adds 345,000 gross acres of developed and un-developed fee mineral title and royalty interest lands across western Canada along with corporate tax pools of about C$100mn. 

The assets produced average royalty production and royalty production revenue of 609 barrels of oil equivalent (boe)/day and C$1.6mn in Q1 2021. Production consisted of 141 b/day of crude oil, 2.2mn ft3/day of conventional natural gas and 103 b/day of natural gas liquids.

At the same time, Topaz has reached a definitive agreement with Tamarack Valley Energy for the previously-announced C$32mn royalty acquisition of a new 2% gross overriding royalty (GORR) interest on conventional natural gas, crude oil and natural gas liquids production from about 300 gross acres of Tamarack’s developed and undeveloped lands in the Charlie Lake light oil fairway.

Production from the acquired lands exceeded 13,000 boe/day in March, consisting of 7,410 b/day of crude oil, 22.6mn ft3/day of conventional natural gas and 1,820 b/day of natural gas liquids. Tamarack says it will maintain production in the 12,000-13,000 boe/day range through a C$60mn minimum capital development commitment.

Both acquisitions are expected to close during Q2 2021, subject to customary closing conditions and, with respect to the Charlie Lake acquisition, Tamarack’s completion of its previously-announced acquisition of Anegada Oil.

Topaz Energy was spun out by Tourmaline Oil, Canada’s largest natural gas producer, in October 2019 and since January 1, 2020 has invested about C$385mn in cumulative royalty and infrastructure acquisitions. Those acquisitions are expected to generate $41-$43mn of annualised Ebitda in 2021 and $46-$48mn in 2022, based on current commodity prices and underpinned by C$500mn of cumulative development spending over the next two years.