The Company is a light oil horizontal development company focused almost exclusively on the Cardium with a stacked resource play in the Second White Specks. The Company's assets are almost entirely west of the fifth meridian and a two hour drive north of Calgary on predominantly year-round access land.
The Company has 165 gross (90 net) sections of land and an inventory of 232 gross (148 net revenue) future drilling locations in the Cardium horizontal light oil play of which only 32% of net locations are recognized to date in the GLJ reserves report. Newly drilled Cardium horizontal wells can be easily connected to existing gathering systems and facilities. Last winter's drilling program demonstrated initial production results for slick water fracture stimulations that were vastly superior to previously used fracture stimulation techniques. In addition, enhanced oil recovery schemes have the potential to significantly increase the recovery factors in the Cardium.
The Company has 104 gross (46 net) sections of land prospective for the emerging new Second White Specks light oil play and has assembled a drilling inventory of 102 gross (59 net) drilling locations. This zone is 100 meters deeper than the Cardium formation, is the oil-source zone for the Cardium play and is oil-charged with similar quality light oil that is in the Cardium formation. The Company believes this play can be exploited by drilling off existing Cardium drilling pads and that the oil and solution gas produced can be handled at existing Cardium facilities.
While the Company remains focused on developing its light oil assets, it also still has a large inventory of low risk natural gas drilling locations that could be developed when natural gas prices recover. The Company's remaining Edmonton Sands shallow gas drilling inventory is now estimated to be 542 gross (307 net) locations.
The continued development of the Company's oil and gas assets is dependent on the ability of the Company to secure sufficient funds through operations, bank facilities and other sources from the strategic alternative process. Subject to the outcome of the strategic alternatives process, the Company intends to continue to focus on converting its asset base so that more than 50% of its production is from oil and NGL.
The Company is continuing the process to identify, examine and consider a range of strategic alternatives available to the Company with a view to enhancing shareholder value. The strategic alternatives may include, but are not limited to, a sale of all or a material portion of the assets of Anderson, or a drilling joint venture, either in one transaction, or in a series of transactions, the outright sale of the Company, or a merger or other strategic transaction involving Anderson and a third party. The Board of Directors believes that the Company's shares trade at a discount to the value of the underlying assets, especially given its high quality light oil production base, prospective horizontal light oil drilling inventory and significant tax pools. The Board of Directors has established a special committee comprised of independent directors of the Company to oversee the process and has retained BMO Capital Markets and RBC Capital Markets as its financial advisors to assist the Special Committee and the Board of Directors with the process.
Since the process began in 2012, the Company has:
-- sold $74 million of non-strategic assets, which were primarily natural gas assets and other miscellaneous properties;-- reduced bank debt to $55.1 million at March 31, 2013 from $106.7 million at March 31, 2012;-- restructured all of its shallow gas and Cardium drilling commitments so that by the end of January 2013, Anderson had completed all of its drilling commitments;-- reduced its head office staff count and head office leasing costs; and-- opened a confidential data room to assist with the process.