Bulk of Vintage assets going into trust

Gary Park

Midnight is switching to Daylight in a Vintage transaction. Calgary-based E&P junior Midnight Oil & Gas announced Sept. 23 it is buying the Canadian assets of Oklahoma-based Vintage Petroleum for C$350 million in cash. In the process it plans to convert itself into a royalty trust, named Daylight Energy Trust, which will hold 95 percent of the assets. Following the lead of others joining the trust ranks, the remaining assets will form Midnight Oil Exploration, a junior exploration company.

The deal came four months after Vintage announced its intention to pull out of Canada by selling assets it purchased from Genesis Exploration in 2001 for C$898 million. Daylight will produce 15,000 barrels of oil equivalent per day and distribute 65-70 percent of net cash flow to unit holders. It will also hold 450,000 net undeveloped acres, while Midnight Oil and Gas will start operations at 750 barrels of oil equivalent per day and get 120,000 acres of undeveloped land.

Daylight’s properties are in Alberta’s west-central and Peace River Arch areas.