Transaction is Expected to Double Production While Expanding Presence in Williston Basin
CALGARY - Invico Capital Corporation ("Invico"), a Canadian investment fund management firm providing alternative investing and financing solutions in North America, announced today that it has closed a non-operated working interest deal worth US$32 million in North Dakota's Williston Basin through its signature fund, Invico Diversified Income Fund ("the Fund").
The asset was purchased from a leading operator through the Fund's U.S.-based subsidiary energy company, Shoreline Energy Holdings II, Inc., and is expected to add 730 boe/d net revenue production (as of May 2022), effectively doubling the Fund's U.S.-based production.
“This is the largest energy transaction we’ve ever completed and serves as the second deal closed between Invico and this operator,” said Jason Brooks, President of Invico and Portfolio Manager of the Fund. “The first transaction closed in the fall of 2020 and was an important step into North Dakota and the Williston Basin on behalf of the Fund. This current deal builds on that entry point and knowledge gained over the past year and will help establish a new core area for us while also helping diversify our U.S.-based portfolio and introduce the Fund to a large group of experienced operators in North Dakota.”
The 64% oil-weighted acquisition is expected to add over US$12 million in free cash flow for the remainder of 2022 and approximately US$9 million for 2023, based on strip pricing. It is also expected to be immediately accretive to unitholder net asset value (NAV) and cash flow with an acquisition multiple of approximately 2X based on first-year cash flow estimates at current strip pricing.
Over the past year and a half, Invico has executed a highly successful expansion of its non-operated and royalty energy business, which has more than quadrupled production through organic growth and acquisitions. The Fund earlier announced an additional distribution for unitholders of record as at March 31, 2022, due in part to the strength of North American energy fundamentals and the portfolio’s approximate one-third exposure to oil and gas production.
“Consistent with the mandate of the Fund, Invico will continue to provide additional distributions above our regular payments based on energy revenues being maintained at or near current levels,” said Brooks.
For prudent risk management, the Fund recently implemented additional hedges through the end of 2023 to protect economics above its hurdle rate and for the majority of the acquired asset’s payback period.
“High commodity prices and economic constraints continue to create inflationary pressures across the industry,” said Brooks. “The Fund is performing very well, and we hope to continue to provide an ongoing hedge against inflation by providing additional income to our unitholders through the foreseeable future.”