A well flare is pictured in the Groundbirch area of B.C.’s Montney formation.
Deventa Energy Inc., a small, private energy company, is pounding the pavement looking for $100-million in a big test of investor appetite for early-stage Canadian energy plays in a depressed market.
Deventa has assembled a sizable land position in the southern part of the prolific Alberta Montney region and is now looking for capital to start drilling $10-million horizontal wells.
It's the same liquids-rich gas area where companies such as Tourmaline Oil Corp. and Canadian Natural Resources Ltd. have had strong results.
The company is led by former Celtic Exploration geologist Peter Cowling. Celtic was a Montney gas producer acquired by Exxon Mobil Corp. for $2.6-billion in 2012.
Deventa and its agent, FirstEnergy Capital Corp., are currently on a road show in the U.S., pitching the story to private-equity firms in a move that's seen as bold, given today's industry conditions.
It has been a rough several months for publicly traded oil and gas firms. The collapse in crude oil prices has forced them to slash budgets, reduce or suspend dividends and cut staff, leading investors to sell.
However, industry sources have said there are numerous investment funds with ample capital looking to invest in ideas that may be less accessible to public investors. Indeed, private equity has been playing a growing role in the Canadian oil patch in recent years, and has provided early-stage funding to energy companies that eventually go public.
Mr. Cowling was not available for comment, but according to presentation materials obtained by The Globe and Mail, Deventa is looking to sell 28.6-million shares at $3.50 each by May 26.
Most of the proceeds would be used to fund the drilling of five horizontal wells on the company's more than 245,000 acres, as well as to build a pipeline and construct a condensate facility. It would use the remainder for exploration, land acquisition and other corporate purposes.
Deventa has no current production, so this is very much an area play keying off some of the success other players have had in the Montney. The firm has 100 per cent ownership of fields called Pepper and Harley.
There are 80 shareholders currently and insiders own a fifth of the stock.
Among the company's directors is Daniel Halyk, chief executive of Total Energy Services. Its chief operating officer is Peter Lundberg, who most recently was a director in FirstEnergy's acquisition and divestiture group.
Jeffrey Jones