Weyburn 鈥� If you want to find someone eternally bullish about the Saskatchewan oil and gas sector, just sit down a few minutes with Del Mondor, owner of Aldon Oils, a private, Weyburn-based producer.
After all, you鈥檇 have to be bullish to be buying right now, which he is. In the late spring he picked up 350 barrels per day of production from Enerplus. That company鈥檚 second quarter report stated they brought in $9.6 million from divestment of 350 bpd in southeast Saskatchewan.
The deal closed June 1, Mondor said on Aug. 16.
鈥淭hese were three properties that were competitively marketed by Sayer Energy Advisors in Calgary. I understand it was a fairly competitive offering, and we were the winners,鈥� he said.
There were about 65 wells in all. 鈥淭here鈥檚 a mixture. There鈥檚 a few shut-ins, a few disposals, a couple injectors, lots of verticals and horizontals.
鈥淗onestly, I鈥檝e been driving by these assets since I was 18 years old, kind of dreaming of owning them one day,鈥� he said with a smile.
鈥淚 would think that kind of makes me bizarre, 18 years old, thinking of owning oil assets.鈥�
The properties are next to Tatagawa, Colgate, and an Enerplus鈥� piece of the Whitecap-operated Weyburn unit. This increases Aldon鈥檚 ownership in the Weyburn Unit, but it鈥檚 quite a small fraction, nonetheless.
The deal started with Aldon 鈥渉earing rumblings of them selling鈥� earlier in the year. They evaluated the properties, like they do so many times. 鈥淎nd so many times, disappointed, but in this particular case, they gave us a call back, and we got the deal done,鈥� Mondor said.
鈥淲e took on two of the Enerplus operators,鈥� he said.
Competitiveness
鈥淲e remain bullish on the oil business despite Saskatchewan having issues with competitiveness, and some of the negativity that we are seeing. We still maintain a fairly bullish outlook on Saskatchewan and producing assets in Saskatchewan,鈥� Mondor said.
鈥淭here鈥檚 been a real disconnect between the price of oil, and the value of assets. I think that鈥檚 holding a lot of deals back. There was just a report today in the Calgary Herald about the stock prices of oil companies and the price of oil. So much political interference and policies of certain governments are negatively affecting it. First and foremost, the federal government, which is certainly not promoting our business,鈥� he said.
While he鈥檚 confident enough to put his money down to buy additional oil wells, that doesn鈥檛 mean there isn鈥檛 a level of frustration with moves governments have made reducing the competitiveness of the industry.
鈥淭he governments of the day, at all levels, are so focussed on the liabilities, and the negativity of what鈥檚 going on, that it鈥檚 getting in front of the underlying value of the assets. So when we have a conversation about an asset, the first thing that gets talked about is the liability. That should be the fifth, or sixth, or eighth. It shouldn鈥檛 be a conversation about the liability. It should be a conversation about asset management. These things are assets. Why do they keep referring to them as liabilities? As soon as you drill an oil well, you have a liability. Are you kidding?鈥� he said.
鈥淭he policies of the governments of the days are pushing companies into bankruptcy, and making the liability issue even worse. Rather than supporting these resource companies, and working with them, we hang all these deposits and all this liability first policy in front of all of them. Thus, it becomes a self-fullfilling prophesy.
鈥淵ou see, Aldon Oils wouldn鈥檛 have started, if these policies had been in place. When my dad first started in this business, picking up old wells, making them better, doing the proper work to get these things producing oil and creating employment. Guess what? Technology changed, and we started drilling horizontal wells next to these old wells that my dad was so smart about bringing back up. If we had these policies, back in the day, Aldon oils would have never started. It wouldn鈥檛 be 450 wells today.鈥�
鈥淭hat whole liability-first mentality is killing this thing. I think we need to change this whole thing from liability to asset management, because that鈥檚 what these things are 鈥� assets.鈥�
To that end, he said that a couple of bad managers that have abused the good stewardship that 98 per cent of oil companies have conducted themselves. 聽
Asked about talks between Saskatchewan Headquartered Oil Producers (SHOP), an informal group of junior oil producers, and the Ministry of Energy and Resources regarding regulatory competitiveness, Mondor said, 鈥淭he ministry is taking steps, and they promised us to address Saskatchewan鈥檚 competitive issues. And I think they鈥檙e taking it seriously, but there鈥檚 a level of frustration between SHOP members, the other people that are right on top of it in southeast Saskatchewan, southwest Saskatchewan, and other areas. Overregulation and rural municipality taxation are really forcing us to take our minds and hands off the prize of drilling for and producing more oil.鈥�
All this leads to confusion, and confusion in the industry is not a good thing, he noted, as it results in companies not spending. But he is drilling right now at Lampman. And he sees future development and drilling in the newly acquired former Enerplus properties.
鈥淲e鈥檙e going to work at it, and put our people on it and try to make things better and manager our asset. We will be doing some drilling. We鈥檒l be doing some conversions. And we are expanding the waterflood. That鈥檚 why we bought it,鈥� he concluded.
