MCF Energy Acquires O&G Assets Ready For Near-Term Production
MCF Energy (TSXV: MCF) is looking to quickly move from being an oil and gas explorer to that of an oil and gas producer. The firm this morning revealed it has acquired additional European assets for roughly US$4.8 million, a portion of which are set to see near term production.
The assets acquired are found in the Vienna Basin of the Czech Republic, expanding MCF’s European footprint. The assets consist of three production licenses that cover 6,880 acres, as well as three exploration licenses that cover 42,551 acres.
The purchase was conducted via a combination of cash and shares, with 17.5 MCF shares to be issued to the seller, along with a cash payment of US$1.3 million. MCF has meanwhile appointed Third Source Energy as the manager of the assets, which will be paid US$48,000 per month plus cash bonuses to develop the asset. Third Source is also to receive a net profit royalty of between 2.5% and 10% for a period of seven years, after which the royalty will drop to 2.5%.
The production licenses, NT Ridge, Kransa NP-823, and LM, contain proved and productive targets known as the Miocene sands and Devonian carbonates. The priority for development appears to be NT Ridge, where the company has indicated it intends to return one shut-in well back to production in the current quarter.
A further five development locations at NT Ridge, and one undeveloped location, are ready for drilling later this year, while three locations are being considered for development next year. The license in total is said to have 15 proved undeveloped locations that have an estimated 11.9 BCF of proved and probable reserves with a net present value (10%) of US$53.6 million.
The newly acquired Krasna and LM licenses meanwhile are said to both have wells that can be reworked and returned to production at low cost, however timelines for their development were not provided.
Exploration licenses acquired consist of the Skalice-Ropice, Moravka, and Trinec licenses. MCF appears largely focused on the development of Skalice-Ropice in the near term, with four wells planned for 2025, five for 2026, and one for 2027. Drilling is targeting to test for the Miocene and Devonian reservoirs, with MCF suggesting the potential for what it calls four bonus zones that could dramatically increase its inventory of drill locations.
“This acquisition was driven by the opportunity to quickly start natural gas production by reopening three closed wells and using fifteen ready-to-drill sites in the NT Ridge area. The main advantage of this project is the potential to boost production by shallow, low-cost drilling of nearby areas with available pipeline capacity,” commented MCF Energy CEO James Hill.
MCF Energy last traded at $0.27 on the TSX Venture.
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