Franco-Nevada

Weyburn Unit (Oil)

Weyburn_Area

Location: Saskatchewan, Canada
Operator: Whitecap Resources Inc.
Royalty: NRI: 11.71% / ORR: 0.44% / WI: 2.56%

Franco-Nevada, after Whitecap Resources Inc. (“Whitecap”), has the second largest economic interest in the Weyburn Unit, one of the world’s largest geological CO2 storage projects. The Weyburn Unit is located approximately 129 km southeast of Regina, Saskatchewan and encompasses approximately 216 km2 on a gross basis (net 31 km2) in which the Mississippian Midale beds are unitized. As of December 31, 2020, Franco-Nevada held an 11.71% NRI, a 0.44% ORR and a 2.56% WI in the Weyburn Unit. Production commenced from the Midale zone within the unitized area in 1955 under primary depletion (solution gas expansion). Formation of the Weyburn Unit occurred in 1963 for the purpose of implementing a waterflood pressure maintenance scheme. In 2000, Cenovus, the operator at that time, began injecting CO2 in a portion of the Weyburn Unit as an enhanced oil recovery (“EOR”) method.

Gross production of the Weyburn Unit is approximately 23,000 Boe/d of light oil. Weyburn is a long life asset with a proven and probable reserve life of almost 20 years.

For 2020, revenue received by Franco-Nevada from the Weyburn Unit was $16.0 million. Revenue for the NRI is recorded net of deductions for capital and operating costs, which results in increased leverage to the oil price. Oil production, including NGLs, net to Franco-Nevada was 1,397 Boe/d. Franco-Nevada takes product-in-kind for its WI and NRI share of this production and markets it through a third party marketer. While Weyburn is a highly economic reservoir that has generated robust operating margins in most oil price environments, margins were compressed in 2020 due to low oil prices. Profit-based payments from the NRI were temporarily negative in the spring of 2020 but have since rebounded and are expected to be robust as oil prices recover to more normalized levels.

ASSET HIGHLIGHTS

  • CO2 EOR project commenced in 2000 and continues to be rolled out
  • In 2014, added SaskPower’s Boundary Dam Power Station as second source of CO2
  • Low decline asset with proven production history

2020 2019 2018
Revenue to Franco-Nevada ($ million)1 $ 16.0 $ 33.8 $ 35.5

1 Revenue refers only to payments made to Franco-Nevada