Dundee Energy Limited (formerly Eurogas) acquired the largest accumulation of producing oil and gas assets in Ontario. The assets in crude onshore oil wells and wells that produce only offshore natural gas for $129 million in March 2010. These assets further the company’s goal of creating long-term value for shareholders by acquiring and developing high-quality, long-life assets. The acquisition was funded with $65 million cash and the balance with debt. The assets were placed in a wholly owned company, Dundee Energy Limited Partnership.
The Lake Erie assets, like Castor UGS in Spain, are located in a populous, industrialized consuming market that imports a large portion of its crude oil and natural gas. Oil and natural gas products production in Ontario attracts premium prices due to lower transportation costs than for production shipped from Western Canada. Being next to the large Ontario market and natural gas infrastructure provides an important advantage in the changing dynamics of natural gas markets and transportation in the area, and affords opportunities for business synergies.
Importantly Dundee Energy’s acquisition of the Lake Erie assets included their potential for the significant development of gas storage, the feasibility of which Dundee Energy will evaluate.
In 2010, Dundee acquired a junior company, Torque Energy Inc., producing 84 bopd and 300 mcf/d from onshore fields with a reserve base of 0.7 million boe.
Dundee purchased an onshore, truck mounted drilling rig in 2012 to reduce the cost of drilling new wells, to provide flexibility in scheduling new wells and to improve the safety aspects of drilling in Ontario.