Brookfield-backed Ember Resources closes $220 mln purchase of Apache’s CBM assets

Coal-bed methane (CBM) producer Ember Resources Inc has completed its acquisition of oil and gas-producing properties owned by Houston, Texas-based Apache Corp, peHUB Canada has learned from sources familiar with the matter.

Announced by Apache in mid-August, the deal saw Ember pay US$214 million (C$220 million) for 621,000 acres in the Nevis, North Grant Lands and South Grant Lands of western Alberta, with an average net production of 67 million cubic feet of gas and 237 barrels of liquid hydrocarbons per day. The Apache assets are adjacent to Ember’s existing properties in Alberta’s Horseshoe Canyon.

Following the customary regulatory approvals, the agreement between Ember and Apache was quietly closed on September 30.

The event is a major milestone for the Calgary-based Ember, which two years ago was taken private for $125 million by an investor group led by Brookfield Capital Partners III LP, managed by Toronto-based Brookfield Asset Management, with the participation of ARC Financial, KERN Partners and members of the company’s management team. The deal was welcome, as the company was heavily indebted at the time, and facing a credit crunch. In addition, a number of Ember’s key shareholders wanted to cash out of their investment.

As soon as it was fully refinanced, Ember set out on the acquisition path. In October 2012, the company purchased CBM assets belonging to Santonia Energy Inc (formerly Fairborne Energy Ltd), a Calgary-based oil and gas company. Ember paid $31 million for Santonia properties located near Clive, Alberta.

By combining Apache and Santonia assets with its own, Ember has greatly increased its capacity for producing relatively low-cost and low-risk natural gas resources from CBM. Ember now  produces 110 cubic feet of natural gas per day, according to a report that cites the company’s president and CEO Doug Dafoe.

The Ember-Apache deal had one other outcome, peHUB Canada has learned. As of its closing date last month, Brookfield was left as the company’s sole shareholder. This is consistent with Brookfield’s earlier declared intention of playing a major role in backing Ember’s growth through add-ons and continued development.

Photo of CBM drilling operation courtesy of Ember Resources Inc.