Kevin, many thanks for joining us today, for our readers who might be unaware of all that Venturion Oil Limited does, can you give us a brief overview of its work?
Venturion is a private oil company that was founded in the summer of 2012. We closed our first financing and two acquisitions in January 2013. We raised $140 million in private equity in four rounds of financings the last of which was a $40 million financing which closed this past April. We now own and operate five conventional oil fields 100% working interest and produce 4,900 boepd. We focus on conventional oil opportunities working to increase production and reserves through workovers, pump optimizations, facilities optimizations, waterfloods and drilling. Although we have drilled a lot of horizontal wells, we have not frac’d any to date.
Can you share your primary role and responsibility in Venturion Oil Limited?
Do whatever needs to be done to maximize one equation: (NAV-debt)/fully diluted shares. Of course this has to be done in a safe and socially responsible manner. I am a reservoir engineer by training but a bit of geologist wannabe. We believe that value is created by making good technical decisions and is closest reflected by producing reserves. My role is to lead our team in the pursuit of these goals but I am involved in the technical assessment of our business.
In your opinion, what are the key challenges for the company in 2016? How has the strategic focus change since 2015?
Expanding debt levels had been a challenge but this was recently addressed as we have just raised $40 million from existing shareholders. The key challenge in the next half year will be to have the confidence in the commodity price outlook to pull the trigger on two major capital projects. The focus of the company has recently changed as the company approved modifications to our incentive program to allow an additional 2 ½ years to provide liquidity to shareholders and be able to earn incentives without penalty.
What are your top priorities in 2016? Where would you like Venturion Oil Limited to be by the end of the year?
The Killam waterflood is our most important asset and it is a top priority to keep the field optimized. The Killam waterflood is responding very quickly and it is difficult to keep wells optimized, ensure surface facilities are capable of handling the ever increasing fluid and ensure that there is enough water injection well capacity – and all this while working off WCS pricing. The second priority is to implement a waterflood in the Mica field and attempt to step the pool out to the north. The final priority would be to capture a couple more opportunities through acquisitions.
Founded in 2012, Venturion has grown its production to 4,900 boe/d from 130 boe/d at inception. What is your criteria when looking at new opportunities and assets?
We focus on technically challenging and sometimes risky conventional oil opportunities. We like oil in place, reservoir quality and low recovery factors. When you get this combination, there is always something “wrong” with the field and we try to figure out if we can fix it. We do a lot of work to try to understand an opportunity and before we make an acquisition, we have to have line of sight to doubling our money.
Could you provide an operational update on your biggest operations like Killam? What other opportunities are you currently considering?
As noted above in question 4, the pace of the Killam waterflood response is surprising. From 775 bopd when we bought it, the field is now 2,400 bopd. Inflow in many wells is far greater than we anticipated and we have started installing submersible pumps in some producing wells. Our current challenge is to use the field waterflood response to date to plan out over the next few years to ensure that we have the facilities and injection wells in place to be able to keep on putting bigger pumps in producing wells. The other field that has a lot of promise is the Mica field. This past fall we drilled a nice horizontal well into this relatively thin Charlie Lake zone. This summer we plan to start a waterflood and hopefully extend the pool further to the north. We have drilling opportunities in the Halfway formation in two fields but we need to see at least $50/bbl WTO before proceeding with these projects.
What are the lessons you have learnt since the downturn? Can you provide an example how market conditions have effected Venturion Oil Limited in a positive way?
Keep all costs low and keep production and reserves high. Keep debt low. We are hopeful that we will be able to acquire some good properties with our strengthened balance sheet.
If you could wave a magic wand over the industry, what kind of ‘business innovation’ would you like to implement?
My magic wand wouldn’t be so much with ‘business innovation’ but more for Canadian society’s view on our industry to change. I would like for all Canadians to better appreciate the importance that a strong economy has for us all. It seems like we have had a strong economy for so long that we have forgotten what it is like to do without. Eventually the roadblocks to businesses will hurt us all – it is just a matter of time. The fight against pipelines feels like our fellow Canadians are against us and this is very frustrating. So if I could have a magic wand, it would be for all Canadians to act like a family and work together, because when we win, we win together.
About Kevin Wesa
Kevin Wesa is a reservoir engineer with 28 years’ experience in the western Canadian oil industry. He grew up in rural Saskatchewan and graduated from the University of Saskatchewan with a BSc and MSc in Mechanical Engineering.
He commenced his career at Saskoil in 1989 working on the technical aspects of conventional oil and gas fields in Southwestern Saskatchewan. Since then, he has worked at a variety of companies with his main interest lying in all facets related to the conventional development of waterflooded oil pools.
Mr. Wesa joined private Venturion Natural Resources Limited as a founding member and Vice President of Engineering in 2006, and was promoted to the role of President and CEO in 2008. He was instrumental in leading the company to the successful corporate sale to Barrick Energy in June 2011.
Mr. Wesa is currently President and CEO of private Venturion Oil Limited where he was a company founder in the summer of 2012. Venturion Oil Limited currently produces approximately 4,900 boepd (88% oil) from five conventional oil properties in Western Canada and was awarded the Top Private Emerging Producer by the Explorers and Producers Association of Canada in 2016.