Zargon Oil & Gas to sell Southeast Saskatchewan assets

Canadian-based Zargon Oil & Gas has signed an agreement for the sale of all of its Southeast Saskatchewan assets in a transaction worth C$89.5m ($67.9m).

The assets to be sold have 1,211 barrels of oil equivalent per day (boepd) of low decline production and 5.14 million barrels of oil equivalent (boe) reserves.

Zargon will use the sale proceeds to eliminate its debt.

With the completion of the sale, the company’s remaining assets will be highlighted by the Alberta Little Bow Alkaline, Surfactant, Polymer (ASP) tertiary recovery project, the Alberta Taber and Bellshill Lake low decline oil properties, as well as the remaining Williston Basin North Dakota properties.

Production rates during last year and the first half of this year for these properties are 2,882boepd of low decline production and 15.76 million boe.

The ASP project is currently expected to provide stable oil production for a few quarters, and its existing infrastructure at higher oil prices can be used for multiple ASP phases.

Once the sale of the Southeast Saskatchewan properties concludes, Zargon's remaining assets will have oil and liquids production of 2,240 barrels per day (bpd) and total production of 2,750boepd.

Zargon said that the sale of these assets is a significant step in the strategic alternatives process, which is continuing and may include a financing, merger or other business combination.

The deal is expected to close in early September this year.