Caledonian's first acquisition was the purchase of a royalty on substantially all of the oil and gas properties of Compton (acquired by MFC Industrial Ltd. in 2012 and renamed MFC Energy). Caledonian subsequently acquired the WCSB GORRs and later non-operated working interests through the acquisition of Lario Oil & Gas Company, a private Nova Scotia company. More recently, in June 2014 (with a small follow on acquisition in August, 2014), Caledonian acquired royalty interests from an industry partner based upon a formula where the royalties are equivalent to Alberta royalty credits allocated by the Government of Alberta on shut-in natural gas over bitumen in northeastern Alberta. Caledonian currently receives royalty income from 29 different companies derived from over 1,500 wells producing natural gas, NGLs and oil. These companies include MFC, Bonavista Energy Corporation, Delphi Energy Corp., Bellatrix Exploration Ltd., TORC Oil & Gas Ltd., Exoro Energy Inc. and Encana Corporation.
In 2009 Caledonian purchased an aggregate 5% gross overriding royalty from MFC based upon substantially all of the oil and gas properties of MFC, including undeveloped lands, for a total cost of approximately $100 million. This royalty currently applies to approximately 362,046 net acres of undeveloped lands. MFC has a large focused land base located in the central fairway of the Western Canada Sedimentary Basin, primarily situated in the Province of Alberta. As at December 31, 2013, MFC had an interest in 945 producing natural gas wells, 17 non-producing natural gas wells, 116 producing oil wells and 7 non-producing oil wells.
On July 26, 2011, Caledonian, pursuant to a restructuring agreement, acquired the WCSB GORRs from the WCSB LPs in exchange for 2,107,000 Royalty Units valued at $25,284,000. Production from the WCSB GORRs is currently derived from approximately 47 producing wells on various properties located in Alberta, British Columbia and Saskatchewan.
Non-Operated Working Interests of Lario Oil & Gas Company
Effective December 31, 2011, Caledonian acquired non-operated oil and gas properties for $35.7 million from Lario, a private company incorporated under the laws of the Province of Nova Scotia. The Lario assets are non-operated oil and gas properties that are concentrated in west central Alberta. In April 2012, Caledonian sold its interest in two sections of prospective but undeveloped land in the Nipisi area to Surge Energy Inc. for $300,000 and an 8% gross overriding royalty on future production from these lands. On December 13, 2012, Caledonian sold its interests in the Edson property to Crocotta Energy Inc. C-6 for $5.3 million and on December 14, 2012, sold its interest in the Sundre property to New North Resources Ltd. and Sandpoint Resources Inc. for $0.8 million, the proceeds of which were applied to reduce indebtedness of Caledonian.