Swan Hills Blending Facility

Report
Fortaleza Energy Inc
August 2014
Rational for the Acquisition of Stimsol Business
from Arcan Resources Ltd and the Creation of
BlendForce Energy Services Inc.
Vision – Rapidly Changing Industry
 Improving Commodity Prices however there remains
significant risks with continued success of resource play
development in North America
 Resource Play Development – large land position – deep
drilling inventory – profits driven with field execution- cost
reductions.
 Resource Plays returns are very sensitive to costs and
commodity prices
 Significant shift down market in Companies being financed –
however investors remain selective
Vision - Investment Opportunity
Stimsol Acquisition from Arcan Resources








Operating Business
Immediate Cash Flow
Low maintenance capital
No outside equity requirement
Growth opportunities
Very quick payback – less than two years
Potential to pay dividends in the future
Diversified lines of business
 Exploration – variety of resource plays
 Production – existing producing wells
 Complete management team in place and operating the business
History of Stimsol
 Stimsol created in 1983 Operating in Red Earth Creek
 Stimsol Acquired by Arcan in September 2011 for $24.5mm.
 Business consisted of:
1.
2.
3.
Proprietary Acid Blend with $134/m3 royalty
5 C&A Pumpers, 7 Pressure Tank Trucks
Production Services Business employing 85 people with operational bases
located in Grande Prairie, Blackfalds and Red Earth Creek. Corporate
Office and Lab based in Calgary.
 In 2012 , acquired Firm Acid Supply from Canexus and Univar for
80,000 m3 per
 In 2011, commenced construction of Acid Blend Facility in Swan Hills
for $7.3mm - commission in November 2012.
 2013 disposed of $8.0mm of equipment.
 Terminated take or pay acid supply contracts with Univar and Canexus
The Acquisition – Stimulation Fluid
Blending Facility
 Arcan has agreed to sell to Fortaleza the assets and business
of StimSol for $2.5mm.
 Assets:
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
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The Swan Hills Blending Facility site operated by StimSol located within the town of Swan Hills, Alberta
consisting of 48,400 sq. meter site governed by municipal and provincial surface lease.
Disposal Well located within facility site LSD 2-14-66-10 W5M and bottom hole located at LSD 8-14-66-10
W5M and all equipment associated with asset and special assignment of disposal zone rights
Warehouse & Office Building (50ft X 120ft), including office furniture, pump room and load cell station and
QC lab and associated equipment.
10 – 750 bbl fiberglass acid tanks within containment
4 – 400 bbl steel storage tanks within containment
4 – 100 bbl steel storage tanks within containment
All equipment associated with handling, blending and shipping of all products produced out of the Swan Hills
Facility.
Office, Lab and computer equipment located at 7874 – 10th Street N.E. Calgary, Alberta and the assignment of
the commercial lease agreement.
Vision – Maximizing Value of Service
Area
Blendforce Swan Hills
Service Area – 250 KM
Carbonate Play
 Light Oil Resource Play being exploited with Horizontal
multi stage acid fracs.
 840 sections of oil charged platform reef.
 Estimated Unconventional OOIP of 2.5 billion bbls with per
section OOIP of 1.6 -6.2mmbbls – “Sleeping Giant”
Wells Drilled Since 2006
Play Types – Undrilled LSDs
Swan Hills – Carbonate Play
35% Acid
1.
Acid in the Field
Acid Frac – 1,000 cubic meters - 33 Truck Loads
Diluted to 28% and chemical added:




2.
Friction reducers
Corrosion inhibitors
Solids Controls
Demulsifier
Spearhead – 200m3 per job – any horizontal stage fracs.
Diluted to 15% and chemicals added
 Corrosion inhibitors
 Solids Controls
3.
Stimulation Fluid –Well Cleanouts – Scale Removal -15 m3 per job
Diluted to 15% and chemicals added
 Every producing well with associated water requires Acid treatment
 Specialty Chemical Blends
4.
Flow Back Fluid Disposal
 Disposal Well
Fortaleza
Public Co
TSX V Listing
Oil and Gas
Meets Minimum Listing
Requirements for TSX-V
$4.7mm @10%
Buick Creek
BlendForce
Acid Frac Fluid Blending & Supply
Acid Stimulation & Production
Enhancement Fluids
Flow Back Water Disposal
Pine Creek
Petroleum Based Frac Fluid Supply Logicss
Revenue Streams and Field Margins
$/m3
Scenario 1
Scenario 4
Field Price
Acid Frac Supply
BlendForce
Pumper
$
700 $
850
Raw 38% Acid @ Bruderheim
Trucking Swan Hills
Cost of Added Chemicals
Blending Costs
Trucking to Location
Total Cost of Supply
$
$
$
$
$
$
175
55
140
20
55
445
Net Margin
$
Volume for Diluted Acid per Job m3
Number of Trucks Loads
Days of Blending and Shipping
Revenue per Job
Gross Margin Per Job
Cost Savings Per Job
$
$
$
175
140
$
$
110
425
255 $
425
900
33
1
$
$
900
33
8
Scenario 5
Scenario 6
Load and
Frac 15%
Water
Go
HCLSpearhead
Disposal
Savings BlendForce BlendForce Pumper Savings
$
310 $
330 $ 450 $ 120 $
18
$
$
118
$
79 $
55
$
$
$
134 $
181
$
3
$
176 $
149
$
15
15
1
7
630,000 $ 765,000 $ 135,000 $
229,500 $ 382,500
$
36%
50%
$ 296,700
48
15
200
7
1
200
2000
60
4,650 $ 66,000 $ 90,000 $ 24,000 $
2,640
29,800
$
57%
45%
$ 24,000
36,000
30,000
83%
Identified Work
2014
Q1
28% Acid Fracs Supply
15% Spearhead
Load and Go
Water Disposal
28
120 Licenced Carbonate HZ Wells in the service area
2015
Q2-Q4
13
10
89
Q1
11
12
42
11
Q2-Q4
18
8
92
18
Expansion Opportunities
 Transportation
 From Terminal to SHAW Blending Facility - $50/m3
 From Shaw Blending Facility to Field – $50-75/m3
 New Location
 Blending Facility is new location
 SE Saskatchewan - Bakken
 Fort Nelson -NE BC Montney
 Supply Logistic Management for Frac Fluids
 Fluid & Logistics Management
 Water and Petroleum Based Fracs
 Flow Back Water Disposal
 $750,000 Investment
 Capacity to dispose of 300 m3 of fluid per day
 New completion flowback 1500 - 2500 m3 per well.

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