Alberta-based Gear Energy Ltd said it has begun a formal process to explore, review and evaluate “strategic repositioning alternatives” to enhance shareholder value.
Gear’s board intends to “undertake a comprehensive review to identify and consider a broad range of alternatives to enhance shareholder value, including but not limited to a merger, corporate sale, corporate restructuring, sale of selected assets, purchasing assets, the potential spin-off of selected assets, optimizing future capital allocation and capital return strategies, or any combination of these alternatives,” the company said in a statement Wednesday.
Gear said it has been “approached by several parties interested in transactions,” although it has yet to receive a formal proposal. The strategic process may result in no specific transaction taking place, the company said, as it seeks to optimize and improve its operations “with a focus on providing sustainable long-term growth and competitive returns to shareholders.”
Gear has emphasized that it has not set a definitive timetable for the conclusion of the strategic process nor has it taken the decision to look for any specific alternative. The company said it will not provide updates until its board “approves a definitive transaction or strategic repositioning alternative, or otherwise determines that additional disclosure is necessary or appropriate.” Gear has hired Peters & Co. Limited as a financial advisor in connection with the strategic process.
Meanwhile, Gear reported that its production has grown steadily through September, due to positive results from its summer drilling program. Seven Mannville heavy oil wells have been drilled since the spring break, with five of them on production and the remaining two expected to be pumping by early October. Three of the wells were unlined multilateral horizontal wells and the other four were single lateral lined horizontal wells, the company said.
Gear said September production is currently estimated at approximately 5,600 barrels of oil equivalent per day (boepd) with exit rates above 5,800 boepd. Four of these seven new wells will not only add new production, but have also successfully removed and expanded future drilling inventory. In addition, Gear recently mobilized a rig in Tableland, Saskatchewan, to drill the first of two light oil wells.
Gear has also successfully started water injection on the new enhanced oil recovery project at the Wildmere Cummings pool, as well as completing its planned flood expansions at Wilson Creek. Across the enhanced oil recovery portfolio, there have been many encouraging results so far in 2023, with increases in oil production at Wilson Creek, Maidstone and Wildmere, according to the company.
Gear is a Canadian energy company focused on the exploration and development of heavy oil production, primarily in east-central Alberta and west-central Saskatchewan.
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