Baytex Energy Corp. has agreed to buy about 46 sections of undeveloped oil sands leases in the Cold Lake area of northeast Alberta for C$120 million.
The oil and gas company is looking to enhance its opportunities for growth by building upon its existing heavy oil and thermal resources.
"The undeveloped oil sands leases are proximal to our core heavy oil assets at Cold Lake and are prospective for both thermal and cold development," Baytex said in a statement.
The Calgary, Alberta-based company focuses on the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Williston Basin in the U.S. About 87% of Baytex's production is weighted toward crude oil, with a particular emphasis on heavy oil.
Tuesday, Baytex noted that the acquisition adds an approved steam-assisted gravity drainage project to its asset portfolio, which currently includes thermal recovery projects at Seal in the Peace River Oil Sands and at Kerrobert in southwest Saskatchewan.
"Once developed, thermal recovery projects provide a source of long life, low decline production," Baytex said. "Developing these projects will reduce our corporate decline rate and enhance our ability to continue to execute our growth and income model over the long term."
The amount will be funded by drawing on Baytex's revolving credit facility. The acquisition is expected to close in early October.
Baytex also said it has received regulatory approval for the construction and operation of a two-stage bitumen recovery scheme using steam-assisted gravity drainage. The company anticipates moving forward with a pilot steam-assisted gravity drainage project in 2013.
Copyright (c) 2012 Dow Jones & Company, Inc.
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