Paramount Resources Buys Apache's Canadian Subsidiary as Another Producer Exits Oil Sands

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Researched by Industrial Info Resources (Sugar Land, Texas)--Paramount Resources Limited (TSX:POU) (Calgary, Alberta) has agreed to acquire Apache Corporation's (NYSE:APA) (Houston, Texas) Canadian subsidiary for C$459.5 million (US$353.7 million), and plans to merge with another exploration company later this year. Paramount expects these moves to shift its focus to the Montney, Duvernay and Deep Basin formations in the oil sands. Industrial Info is tracking more than $4.3 billion in active projects involving Paramount.

Paramount, through its subsidiary Cavalier Energy Incorporated, already is seeking permits for the Hoole Grand Rapids project in Wabasca, Alberta, a bitumen production field and processing plant in the Athabasca oil sands region. Paramount believes resources at Hoole are capable of supporting a project in excess of 100,000 barrels per day (BBL/d) of production by 2022. The steam-assisted gravity drainage (SAGD) facility is expected to begin with a $390 million first-phase commercial demonstration project, which would produce 10,000 BBL/d. For more information, see Industrial Info's project report.

Paramount plans to further develop Hoole Grand Rapids with a $1.2 billion Phase IIA expansion, a $1.2 billion Phase IIB expansion and a $1.2 billion Phase IIC expansion, each of which would add 30,000 BBL/d. Phase IIA also would see the $55 million addition of a cogeneration unit, which would generate 30 megawatts (MW) for the facility using natural gas. For more information, see Industrial Info's project reports on the IIA expansion, IIA cogen addition, and the IIB and IIC expansions.

Paramount also says it will merge with Trilogy Energy Corporation (TSX:TET) (Calgary), which it has targeted for completion in September and is conditional upon completion of the Apache Canada acquisition.

In the Kabob area of the oil sands, Paramount has $320 million in projects under construction at the Grande Prairie 6-18 Natural Gas Processing Plant, including a $100 million first train and a $100 million second train, each of which is expected to process up to 100 million standard cubic feet per day of natural gas and 40,000 BBL/d of natural gas liquids (NGL), as well as a $40 million condensate stabilizer for Unit 1, a $40 million condensate stabilizer for Unit 2 and a $40 million natural gas-fired unit, which is expected to generate 21 MW. Each condensate stabilizer is expected to process up to 40,000 BBL/d. For more information, see Industrial Info's project reports for the first train, second train, first stabilizer, second stabilizer and power unit.

Apache Joins Growing List of Firms to Bid Farewell to Oil Sands
Apache is just the latest producer to abandon Canada's oil sands in favor of the Permian Basin in West Texas. One year ago, Apache increased its 2016 capital budget to accommodate its $100 million 2016-17 drilling program in the Permian's Alpine High play. The company is drilling six directional wells in the Woodford Formation; one in the Barnett Formation; one in the Wolfcamp Formation; and one in the Bone Springs Formation. For more information, see Industrial Info's project report and March 27, 2017, article - Rising Production, Attractive Geology Draw Producers to the Permian Basin.

Earlier in the year, Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) and ConocoPhillips (NYSE:COP) (Houston, Texas) also fled the oil sands, citing low prices and hefty drilling costs. Canada has turned to China and other possible foreign investors to fill the gap. For more information, see June 9, 2017, article - Canada Invites China to Invest in Alberta's Oil Sands, as $12 Billion in Projects Set to Kick Off by End of Year; May 5, 2017, article - Shell to Spend $25 Billion on Oil & Gas Projects in 2017 after Stronger Prices Boost Profits; May 3, 2017, article - ConocoPhillips Makes Headway on Natural Gas Projects in Texas and Alaska as it Trims Capital Spending; and April 10, 2017, article - Cenovus Closer to Taking Top Spot in Canadian Thermal Production as Deal with ConocoPhillips Progresses.

The deal with Paramount is expected to net Apache about $713 million, which it plans to reinvest in the Permian, as well as its assets in other areas of the U.S.; the U.K.'s North Sea; and Egypt. Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.