Page 8 - NorthAmOil Week 39 2022

NorthAmOil PROJECTS & COMPANIES NorthAmOil

Hammerhead announces plans

for US listing via merger

NORTH AMERICA CALGARY-BASED Hammerhead Resources targeting free cash flow neutrality in 2023, driven
announced on September 26 that it planned to by “already realised drilling and completion cost
list on the Nasdaq via a merger with a special optimisations, operating cost and downtime effi-
purpose acquisition company (SPAC), Decar- ciencies, front-loaded infrastructure investment
bonization Plus Acquisition Corp. IV (DCRD). and minimal go-forward debt service require-
The CAD1.39bn ($1.02bn) deal represents a rare ments”. It is also targeting production growth of
US listing for a Canadian oil and gas producer. roughly 50% between 2022 and 2024.
Both companies are backed by private equity “Not only does Hammerhead stand poised
firm Riverstone Holdings. They appear to be bet- to harvest what we consider to be among the
ting on higher investor confidence in Canadian most attractive rates of return well locations in
oil and gas despite a pivot away from fossil fuels Western Canada, but Hammerhead’s current
on a global level among numerous players, espe- emissions profile is already advantaged through
cially in the context of the energy transition. its investment of over CAD400mn [$293mn] in
Hammerhead was formed in 2009 and modern, technically optimised facilities that are
focuses on the Montney formation in Alberta. being utilised across its properties,” stated Ham-
The company’s asset base comprised roughly merhead’s CEO, Scott Sobie.
111,000 net acres (449 square km) and 146 gross DCRD raised $275mn last year and said it
producing wells within the light oil window of was looking for a target focused on developing a
the Alberta Montney as of June 30. Its 2022 pro- platform that decarbonises the most carbon-in-
duction is anticipated to average 31,500-32,500 tensive sectors, including energy. The transac-
barrels of oil equivalent per day (boepd), with tion with Hammerhead is anticipated to generate
liquids comprising around 42% of output. gross proceeds of about $320mn, and indeed,
Hammerhead noted in its announcement the producer intends to use these proceeds to
that the Montney has ranked among the most accelerate its carbon capture and storage (CCS)
attractive plays in North America in terms of well programme while also pursuing cash flow and
returns and capital efficiency. The company is output growth.™

BP lays off contractors at

Ohio refinery following fire

OHIO BP was reported in late September to have laid had also led to the release of sulphur dioxide and
off most contractors at the Toledo, Ohio refin- hydrogen sulphide and had caused significant
ery, which it co-owns with Cenovus Energy on a property damage.
50:50 basis. The move follows an explosion and The outage at the refinery sent Chicago gas-
fire at the facility earlier in the month. oline cash differentials to new highs. Chicago
The layoffs, reported by Reuters, which cited CBOB gasoline gained traded $0.80 per gallon
sources familiar with the matter, were seen as a ($0.21 per litre) above futures on the New York
sign that BP anticipated a prolonged outage at Mercantile Exchange (NYMEX) according to
the refinery. The facility went offline following traders, representing a rise of more than 700%
the explosion and there is speculation that it year on year.
could be shut for several months. Two workers Cenovus acquired its 50% stake in the
were killed in the disaster. Toledo refinery via its merger with Husky
The cause of the explosion has not been dis- Energy in 2021. In August, the company said
closed. However, a source told Reuters that leak- it had agreed to buy the remaining 50% stake
ing fumes from a crude unit may have triggered from BP. The deal is anticipated to close by the
the explosion in another unit at the refinery. end of this year.
According to the source, the subsequent fire The refinery has the capacity to process up
affected multiple units at the plant. The incident to 160,000 barrels per day (bpd) of oil. It had
is under investigation, including by the Chem- resumed operations in recent weeks following
ical Safety Board. The board said the explosion the completion of a maintenance turnaround.™

P8 www. NEWSBASE .com Week 39 29•September•2022