TSL Express Daily News

CALGARY, AB, March 14, 2022 /PRNewswire/ - Strathcona Resources Ltd. ("Strathcona" or the "Company") is pleased to announce it has completed its amalgamation with Caltex Resources Ltd. ("Caltex") and Stickney Resources Ltd. ("Stickney").

On November 30, 2021, Strathcona and affiliates of Waterous Energy Fund ("WEF") acquired Caltex, a private oil company with high-margin enhanced oil recovery ("EOR") assets proximate to Strathcona's Lloydminster heavy oil EOR operations. At the time of acquisition, Caltex produced ~13,000 boe/d (98% oil).

On January 31, 2022, Strathcona and WEF acquired the Tucker asset through an acquisition entity named Stickney Resources Ltd. The Tucker asset is a high-margin, thermal steam-assisted gravity drainage asset located in the Cold Lake region of Alberta, proximate to Strathcona's Orion and Lindbergh thermal properties. At the time of acquisition, Tucker produced ~19,000 bbl/d of oil.

On March 11, 2022, Strathcona upsized its covenant-based credit facility by 67% to C$1.5 billion, and Caltex and Stickney were amalgamated into Strathcona. Strathcona's credit facility has a maturity date of February 27, 2026, with an anticipated draw of $870 million as of March 31, 2022. Strathcona's capital structure also includes US$500 million of 6.875% senior unsecured notes due 2026.

Post this consolidating transaction, Strathcona will have materially increased its scale with production of ~110,000 boe/d (85% oil and liquids) and 1.9 billion boe of proved-plus-probable (2P) reserves (~48-year reserve life index), making it one of the largest private oil companies in North America. Strathcona's assets are concentrated in three core operating areas:

• Cold Lake Thermal Oil: ~50,000 boe/d (100% liquids) from the Lindbergh, Orion and Tucker assets, located in the Cold Lake region of Alberta.
• Montney Gas: ~35,000 boe/d of liquids-rich natural gas (45% liquids) in Kakwa, Alberta and Groundbirch, British Columbia.
• Lloydminster Heavy Oil: ~25,000 boe/d (99% liquids) from long-life, EOR-supported heavy oil assets located in Saskatchewan and Alberta.

"This is an exciting day for Strathcona," says Rob Morgan, President and Chief Executive Officer. "The amalgamation continues our highly disciplined and focused approach to growth. With the addition of Caltex and Stickney, we are now positioned as the sixth-largest Canadian oil and natural gas producer as measured by proved-plus-probable reserves. We believe our consolidation strategy of combining highly complementary, premier quality assets in a scalable operating platform provides operating efficiencies, optionality for organic growth from an established infrastructure footprint and supports continued progress on reducing our overall emissions intensity."

Advisors

ATB Capital Markets, BMO Capital Markets, and CIBC Capital Markets acted as financial advisors to Strathcona on the Caltex acquisition. RBC Capital Markets and TD Securities acted as financial advisors to Strathcona on the Tucker acquisition.

About Strathcona

Strathcona is a Calgary-based private, oil-weighted company focused on the exploration, development and production of oil and gas resources in Western Canada. Strathcona is owned by Waterous Energy Fund and Strathcona employees.

Rob Morgan
President & Chief Executive Officer

Michael Makinson
Senior Vice President & Chief Financial Officer