In The Market: Canaan Resources retains advisor to sell Arkoma assets


[Context: On July 5, Canaan Resources, LLC announced it had retained an advisor to sell two asset packages, one producing and one undeveloped, in the Arkoma Basin. Canaan Resources, LLC shares the same address as Canaan Resource Partners (CRP), according to state of Oklahoma data and CRP’s website. Further details and related links are below.]

Canaan Resources to Sell Arkoma Basin Producing Package and Undeveloped Contiguous Woodford Acreage Package

DALLAS–July 05, 2017–(BUSINESS WIRE)–Canaan Resources, LLC has retained Energy Capital Solutions, LLC to sell Canaan’s Arkoma Basin assets located primarily in Pittsburg and Hughes Counties, Oklahoma. Canaan is selling its assets in two packages. The Undeveloped Package is comprised of 33,932 net contiguous acres with approximately 300 drilling locations in the Woodford delineated by 122 sq. mi. of proprietary 3D seismic, plus potential Caney and Mayes formation upside. The Producing Package is comprised of 20,392 net Woodford acres and 65,052 net Hartshorne acres with 604 producing wells with 93 Bcfe of PDP reserves, 119 PUD locations with 62 Bcfe of PUD reserves, and 139 additional locations. Non-binding indications of interest are due from interested parties by August 4.

Undeveloped Package

Canaan’s Undeveloped Package includes 33,932 net contiguous acres (83% HBP) of Woodford drilling locations supported by a proprietary 122 sq. mi. 3D seismic dataset across Scipio Field in Pittsburg, Hughes and McIntosh Counties, Oklahoma. The package includes only the deep rights below the Hartshorne Coal formation on this acreage. This is a unique opportunity to acquire largely contiguous acreage position in the core of the Arkoma Woodford with additional economic stacked pay from the Caney and Mayes formations. Net to Canaan’s interest, the Company estimates resource potential of 786 Bcfe with a PV-10 value of $334MM. Woodford wells generate on average more than 2.3x ROI and 30% IRR at $3.00/Mcf NYMEX gas.

Producing Package

The Canaan Producing Package includes currently producing wells, infrastructure and associated acreage, including 65,052 net acres with Hartshorne rights (94% HBP) and 20,392 net acres with Woodford rights (92% HBP). Canaan has identified 604 producing wells, 119 PUD locations and 139 additional locations in this package. Associated reserves are 93 Bcfe net PDP ($71.7MM PV-10), 62 Bcfe net PUD ($32.9MM PV-10), and 46 Bcfe net Probable/Possible ($14.8MM PV-10). Last twelve months’ cash flow is $13.1MM from average net daily production of 23.4 MMcfe/d. Installed infrastructure and field personnel are available to continue to efficiently manage operations at a relatively low cost.

Energy Capital Solutions has an online data room for interested parties to review the assets in more detail upon execution of a confidentiality agreement.

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