Saguaro Resources Ltd. ("Saguaro" or the "Company") announced that it has closed the placement of $50 million of secured notes, and recently expanded its syndicated revolving credit facility from $65 million to $105 million. Saguaro is now fully funded to execute its accelerated development program.
"Saguaro has the potential to be one of the great value driven stories in the Montney" said Stacy Knull President & CEO. "Our Company has a proven track record, attractive economics underpinned by stable condensate yields, significant growth potential and a strong financial position."
"With this funding we plan to ramp up our capital spend in 2017, 2018 and beyond. Our high free condensate yield and low drilling and completion costs provide very attractive economics at current strip prices. Saguaro's goal is to more than double our 2016 exit production rate of 12,000 boe/d by the end of 2018."
On April 13, 2017, the Company closed the private placement of $50 million of 8.5% second lien secured notes due 2022. RBC Capital Markets acted as Sole Lead Agent on the transaction, with CIBC Capital Markets and National Bank Financial acting as co-agents. The Notes were placed with certain funds managed by Signature Global Asset Management, a division of CI Investments Inc., and EdgePoint Wealth Management.
Additionally, on March 1, 2017, the Company expanded its committed, syndicated revolving credit facility from $65 million to $105 million. Immediately following the closing of the notes transaction, Saguaro had net debt of $56 million, including only $16 million drawn on its revolving credit facility.
Saguaro is a private oil and gas company backed by private equity firms Pine Brook Road Partners LLC and Camcor Partners Inc. The Company holds a 100% working interest in a large, contiguous, liquids-rich land position in the British Columbia Montney. Saguaro estimates that 86% of its 162 section land base is currently de-risked.
Given its development success to date, Saguaro sees the accelerated development program as a low-risk opportunity to create significant value. The capital program can be executed while maintaining reasonable debt metrics, and risks will be further mitigated by the Company's prudent hedging program.
Saguaro is now fully funded to execute its accelerated development program. In 2017, this program will include drilling 28 wells (24 of which will be brought on-stream) and the expansion of its processing facility to 100 MMcf/d.
Saguaro's highly economic Montney play allows for rapid growth in production and reserves even in a low commodity price environment. Since inception, the Company has drilled 32 horizontal wells, with 2016 exit production above 12,000 boe/d (58 bbl/MMcf of liquids to-date). Saguaro's production has more than tripled since commercial development commenced in mid-2015.
Saguaro had estimated proved reserves of 84 MMboe and estimated proved plus probable reserves of 270 MMboe at year end 2016. This represents a 140% increase in proved reserves and a 150% increase in proved plus probable reserves since the end of 2015. The Company's reserves are evaluated by Sproule & Associates Limited.
Regularly updated corporate presentations are available at www.saguaroresources.com
SOURCE: Saguaro Resources Ltd.
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