Good afternoon, ladies and gentlemen. I am Marty Proctor, the Chair of the Board of Directors of Tenaz Energy Corp. I now call the meeting to order. Welcome to the 2023 Annual General Meeting of Shareholders of Tenaz. Today's meeting is being held virtually by way of a live webcast, accessible to all our shareholders who have followed the procedures described in the management information circular for this meeting. The virtual meeting format alleviates the logistical and travel expenses of in-person and hybrid meetings is a more sustainable and environmentally conscious alternative to an in-person meeting. Before proceeding with the business of the meeting, I would like to introduce the other Directors of the corporation, each of whom are joining us online. Anna Alderson, John Chambers, Mark Rollins, and Anthony Marino, a Director and President and CEO of the company.
I would also like to introduce the other officers of Tenaz who are participating in the meeting. Bradley Bennett, CFO, Michael Kaluza, COO, David Burghardt, Senior VP, Engineering, Jonathan Balkwill, VP, Business Development, and Jennifer Russell-Houston, VP Geoscience. In accordance with the company bylaws, I will act as chairman of the meeting. Jamie Gagner of Lawson Lundell LLP will act as Secretary of the meeting, and Nazim Nathoo of Odyssey Trust Company will act as scrutineer. I would like to take a moment to comment on the meeting procedures. Voting on all matters at today's meeting will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be able to vote on each item of business through the electronic meeting platform. Polling is now open for the items of business to be voted upon at this meeting.
If you have not already voted prior to the meeting, please vote now. If you previously voted, you do not need to vote again. The final voting results will be announced and filed by the company following today's meeting. Questions in respect of an item of business may be submitted by a registered shareholder or duly appointed proxy holder through the meeting platform. A corporate presentation will follow the formal portion of the meeting, and questions relating to the company's business and operations will be considered at that time. For efficiency, we have arranged for David Burghardt and Jennifer Russell-Houston, shareholders of the company, to move and second the motions at today's meeting. Notice of this meeting and the accompanying management proxy circular and formal proxy were mailed on May 11th, 2023 , to shareholders of record on April 27th, 2023 .
A quorum for the transaction of business at today's meeting is two shareholders present in person or represented by proxy, holding an aggregate 5% of the common shares entitled to vote at the meeting. According to Tenaz's bylaw, a person electronically participating in today's meeting is deemed to be present at the meeting. I am advised by the scrutineer that a quorum is present, and notice having been properly given, I declare the meeting properly called and constituted for the transaction of business. The first item of business is to receive the audited consolidated financial statements of the company for the financial year ended December 31st, 2022, and the auditor's report thereon. I would ask that questions on the financial statements be deferred until the formal business of the meeting has concluded. We will now move to the items of business to be voted upon.
The polls remain open for voting in respect of each item of business. You may vote at any time until the last item of business is completed, at which time the polls will close. As a reminder, if you have not already voted, please vote now. If you previously voted, you do not need to vote again. The next item of business is to fix the number of directors to be elected at the meeting at five. May I have a motion to fix the number of directors to be elected?
My name is Jennifer Russell-Houston, and I move that the number of directors of Tenaz Energy Corp. to be elected at the meeting be fixed at five.
Will someone second the motion?
My name is David Burghardt, and I second the motion.
Is there any discussion on this matter? As there is no discussion on the matter, we will proceed to the next item of business. The next item of business is the election of directors for the ensuing. The company's advance notice bylaw fixes a deadline by which shareholders must submit director nominations to Tenaz prior to an annual meeting of shareholders, being not less than 30 days prior to the date of the meeting. Tenaz did not receive any shareholder director nominations in respect of this meeting. Accordingly, the director nominees for election at the meeting are those named in the Management Information Circular for the meeting. Information regarding the director nominees was included in the Management Information Circular for this meeting. Each nominee has indicated their willingness to serve as a director.
The board has adopted a majority voting policy that requires a director nominee that is not elected at the meeting by at least a majority of the votes cast, to submit his or her resignation for the board's consideration. The board is then required to determine whether or not to accept the resignation within 90 days of the meeting. The majority voting policy provides that a resignation shall be accepted, absent exceptional circumstances. May I have a motion to nominate the directors of Tenaz Energy Corp., specified in the management proxy circular?
I nominate each person specified in the management proxy circular for this meeting, namely Marty Proctor, Anna Alderson, John Chambers, Mark Rollins, and Anthony Marino, be elected as a director of Tenaz Energy Corp. for the ensuing year.
Will someone second the motion?
I second the motion.
Is there any discussion on this matter? As there is no discussion on this matter, we will proceed to the next business. The next item of business is to appoint KPMG LLP as auditors of the company for the ensuing year and to authorize the directors to fix their remuneration. KPMG has been the company's auditor since 2013. May I have a motion to appoint KPMG as the company's auditors?
I move that KPMG LLP be appointed as auditors of the company to hold office until the next annual meeting of shareholders, and that the board of directors of the company be authorized to fix their remuneration.
Will someone second the motion?
I second the motion.
Is there any discussion on this matter? I am advised that there is no discussion on this matter. If you haven't already voted on the items of business, please do so now through the meeting platform, as voting will close momentarily. Voting is now closed on all items of business. As mentioned previously, the detailed voting results will be announced by the company following today's meeting. The scrutineers have provided their preliminary report of the results of today's voting at today's meeting, and I confirm as follows: In respect to fixing the number of directors to be elected at five, greater than a majority of the votes cast have been voted in favor of this resolution, and therefore I declare the motion carried.
In respect of electing the director nominees specified in the management proxy circular as directors of Tenaz Energy Corp. for the ensuing year, greater than a majority of the votes cast have been voted in favor of the election of each director, and therefore I declare the motion carried, and each of the nominees for election as a director has been elected. In respect of the appointment of KPMG as auditors of the company, greater than a majority of the votes cast have been voted in favor of the appointment of KPMG as auditors, and therefore I declare the motion carried. Is there any other business to be brought before this meeting? Since there is no further business, may I have a motion to conclude the meeting?
I move that this meeting be concluded.
I declare the formal business of the meeting concluded. Thank you for your attendance. I will now ask Anthony Marino, President and Chief Executive Officer of Tenaz, to provide a brief business update. Tony?
Okay, Marty, thank you so much. Before we get started here on this short presentation, I'd like to first of all, say thank you to our board of directors. We've got a great board. They've given this management team great advice, and I think we're a great team going forward. Secondly, I'd like to thank our shareholders. All of you have taken a risk with your hard-earned money, your very important capital, with us, and when you buy and you hold, we take it as a vote of confidence and trust in us, and we take it very seriously that we are here to deliver for you. I'd point out that all of us and every employee of the company is a shareholder of Tenaz, like you. Now I'll turn to the presentation.
I've really only got two substantive slides in here. I'll point out on this cover sheet that we do have three photographs of our assets. If you look on the left, we have a picture of one of our wells at Leduc-Woodbend, near Edmonton in Alberta. On the right, we have one of our upstream assets in the Netherlands, offshore platform K-12B, and in the middle, we have a picture of the onshore plant for our midstream asset in the Netherlands, the NGT system. I'll point out on slide two, our advisory on forward-looking statements, and then as we go to slide four, for, like, make a brief review of our 2022 performance and activities. First bullet on here, we point out that we did implement a modest buyback program beginning last summer.
We have now bought back almost 4% of the original shares in the company. Average cost is CAD 1.99, about 15% below the current trading price. We put this program in place because we felt the shares were undervalued and primarily, and secondly, it performs a function during low liquidity times of being kind of a cleanup trade and helping to provide liquidity for the stock. We've had a pretty good improvement in liquidity over the six months. Nonetheless, keeping that program in place during this time of what we believe to be an undervalued share price compared to our intrinsic value. The second bullet in Canada, we drilled 4 gross, 3.5 net wells at Leduc-Woodbend.
This is our semi-conventional development of a shallow oil pool south of Edmonton. I call it semi-conventional because it is a conventional trap. It's a moderately tight, but not ultra-tight sandstone reservoir. We are using horizontal wells with small multi-stage fracs to develop it and enhance that combination of a conventional trap and unconventional development method gives us that semi-conventional title that we put on this project. We've had very good results on all of those wells this year, this past year in 2022. A couple of them hit the ATB best 10 well, heavy oil well list in Alberta. Just in the last couple of days...
ATB has released its summary of the 10 best heavy oil wells for the last 12 months. One of our wells is on that list, too. It's been a good project since its discovery by Altura. All of the wells that have been drilled there have been productive. You know, I'm proud that after the recapitalization of Altura, which was a very efficient company and had made a great achievement, I think, in finding this quite large field at a shallow depth in overall, quite mature area of Alberta, and developed it, I think, with great expertise. In the Tenaz era, we have been able to make continual improvement in some of the technical aspects of the project. We've drilled longer wells.
We've got a, I think, a improved geologic description of the field, both in terms of structure and the reservoir quality in each part of the field. That has allowed us to place these well bores more effectively when we drill the horizontal lateral, staying in zone more, gives us a better place to initiate the frac treatments. We've also made improvements to the frac design, the fluid pumping schedule, and the proppant schedule, that have prevented us really from having any screen-outs lately. Essentially, 100% frac placement in the 2022 program, despite drilling much longer wells, and in itself, lends an increase in capital efficiency, and, you know, overall improvement, we think, of the long-term results.
That is reflected in the very strong F&Ds and recycles that we reported in our 2022 year-end reserve report, as done as evaluated by McDaniel. Drilling growth in the Leduc-Woodbend continues. This is what we represent on the lower left chart, bar chart. The time series starts in 2020, goes through the recap year, late in 2021, Tenaz, the full year in 2022, and then our estimate for 2023 at guidance levels. What we show here is, I think, pretty strong growth in the production. We're up 20% in 2022 over 2021 levels. Project about another 25% increase for 2023, and we do expect that growth to continue in future years as we continue the development program.
It's a good underpinning for the company at this early stage. Of course, Leduc-Woodbend, as large a find as it was, is not of size to carry the company all the way through the intermediate stage. The main purpose of the company is to execute this international M&A program. We'll continue to develop Leduc-Woodbend. We'll continue to have growth, but we'll add to it a number of other assets in the company model in the coming years. That's what this third bullet point relates to. Right at the end of 2022, we announced our acquisition in the Netherlands. First acquisition executed by Tenaz. I think it's a very good deal. We bought offshore production, about 750 BOED, all high priced and high margin European gas.
We also got a share of a midstream project there, about 11% of the NGT gas gathering system. There's really three offshore gathering systems in the Netherlands, and this is a pretty important gas province overall. We've got one of the three systems there, and I think it's actually the best-positioned gathering system to capture the volumes that are likely to be brought into development in the offshore Netherlands over the next few years. Of course, if that occurs, it's got the potential to drive up the dividends from this system and certainly help our ability to have those dividends maintained over time. A strong high-margin upstream asset, a very desirable and dividend producing midstream asset.
Additionally, we have the potential for a very large CCS, or carbon sequestration project, in using some of those depleted offshore gas fields as a place to inject carbon and keep it sequestered for the long term, so that it doesn't go into the atmosphere and increase the carbon, the CO2 concentrations in the air and contribute to global warming. This project is a pretty large one. In a gross sense, it's about 5 megatons -8 megatons, potentially, of carbon, of carbon storage per year. Again, we have about 10% of this project. The project is under economic study today by the operator here, Neptune Energy.
we aren't at the point of the final investment decision, but it is something that if it proceeds to that point, that Tenaz would have an option to invest in. Several different strong components to that Netherlands acquisition, lending 750 BOED that we show projected for 2023 on the lower left chart. You put these two assets together, with the growing netbacks that we've had in Canada, strong netbacks in the Netherlands, and you get the FFO result that we show on the lower right chart.
Again, this is projected forward for this year at the strip, but the targeted production levels, substantial growth that comes from the volume improvement, and it also comes, of course, from some pricing and a diversification of production into the higher netback European gas. Both of these growth curves in production and FFO have been achieved while actually improving the liquidity position of the company. If you take into account our positive adjusted net working capital and combine it with our undrawn bank line, we actually have more liquidity available to us today to employ in future acquisitions than we had at the time of the recap transaction a year and a half ago.
That's despite this, you know, 2.3x growth that we've had in production and roughly eightfold growth that we have had in FFO. We've got growth and improved liquidity, I would say, to implement the strategy of the company going forward. Of course, a big part of our 2022 activity was pursuing acquisitions in the overseas market. We do have a very, I think, disciplined effort here. It's technically based, starting at analyzing every well and every project available in potential acquisitions. I do feel that we've loaded up a very strong acquisition pipeline, potential projects for us, and I'll cover that a little bit more on the next slide.
I'm gonna turn to slide six, which is labeled 2023 outlook. First of all, in Canada, we're continuing the same type of development program that we had such success with at Leduc-Woodbend in 2022. The 2023 program will be 4 gross. In this case, it's 3.35 net wells, and we intend to continue to apply those technical changes that I talked about earlier in terms of well length, typically drilling longer wells, and the changes to the frack schedules to continue to have very strong placement of fracks.
With that drilling and some minor modifications to the facilities in certain areas of the field, we do feel that we're gonna be able to support continued growth in the years to come, where we're pretty lucky at Leduc-Woodbend, it's a very good surface setup, flat terrain, proximal to highways, proximal to services, proximal to a very strong labor force south of Edmonton in the heart of the Alberta oil patch. All a very good setup for us. There's also very good fluid handling infrastructure installed in this field that does allow a lot of growth going forward in the coming years.
We are making a couple of very localized expansions for gas handling, and facility turnarounds this year that will improve our ability to provide that growth as we look forward, and that's a small part of the 2023 budget. If you put together this activity in Canada, along with continued production from the Netherlands asset and the contributions of the midstream asset there, we project a production level of 2,200- 2,300 BOE a day. That is the guidance that we had from last fall, plus the acquisition in Netherlands. We had strong production levels in Q1 2023 already. We'll have a little bit lower production in Q2, just due to the turnarounds and the facility modifications that I talked about a second ago.
We think we're in good shape with respect to guidance. No need to change this range. Similar story with respect to CapEx, the second item that we guide to, E&P CapEx. We project CAD 16 million-CAD 18 million in Canada, expect to be within that range. We projected EUR 4 million-EUR 6 million in the Netherlands. The investment level required there, not quite as much in the first part of this year as we had expected. No change to our production expectations there, but we may not have to employ as much CapEx at present for maintaining this guidance, but there is some potential to reduce it without a change in the production expectations.
That would represent an improvement in free cash, if that occurs, at present, maintaining both guidance levels for 2023. Of course, we're gonna continue the M&A effort that really is the main part of the company's strategy. I'll speak to that just a little bit more before I finish off here. We've got a series of steps shown on the left side of this slide, and to us, this represents the advantage of working in the international market.
The first step, of course, is to acquire the properties. We do feel that when we look overseas, and we ultimately are able to make deals overseas, they can come off at the initial transaction at what we think are better metrics, better multiples than you might have in North America, which has a, we would say, a more competitive industry than overseas, especially for these producing property acquisitions. When we come off at those lower multiples, of course, what we believe is the case here is that we've got higher implied rates of return on the initial acquisitions. That is step one that is represented there.
Step two is that we feel that there are typically significantly greater opportunities for improvements in asset performance in these overseas assets if you compare it to North America. North American industry is quite efficient. It's dramatically improved its efficiency, I would say, continuously over the last 20 years. It's true that when you make acquisitions here, you know, oftentimes you can have moderate improvements in the performance. We find that overseas, the opportunities to improve performance in these assets is typically quite a bit greater in North America. It's been our experience in our previous enterprises and it's something that we seek to take advantage of here in Tenaz.
The first asset we bought in the Netherlands is a non-operated asset. We will make non-operated deals if the rates of return are high enough, and if it offers an opportunity to, over time, expand our presence in a desirable region, as is the Netherlands. Typically, as we look at our larger deals and our more typical deals, we would seek to be the operator and then have control over the asset performance, and we would expect, like our previous experience, to have improvements in the production profile and reduction in unit costs over time. That advantage we see overseas is twofold: better entry rates of return and more opportunity for improvement in asset performance.
You put those together, we do expect that when we make international acquisitions, they'll be able to generate significant free cash flow that we can use in our capital markets model. At the same time, typically, we would expect the assets to have growth capability, and we would, in our model, be returning cash to the owners of the company. You know, today, Tenaz has a modest buyback program. We don't really feel we're at the size today to, although we have a pretty good free cash generation in the company, at a size where we want to initiate a dividend yet. Typically, in the past, that's what we have used as a dividend model, and we do, over time, intend to do that with Tenaz.
The key is to get assets that are capable of generating significant free cash, we would expect improving levels of free cash, that is the ultimate intent of the acquisition program of the company. Final point is on geography. We've got a map of the world on this slide with a couple of shades of blue colored in here. We would point out that both shades represent countries that the team here has had experience in the past. There are certain regions that we are targeting and certain jurisdictions that at least that first inspection, we would feel are potentially worthy of investment. Those are the ones shown in the dark blue. A subset of the jurisdictions that we have worked in.
The primary area of focus for us is Europe. I would say the second area of focus is MENA or Middle East-North Africa. This is represented by the inset box on the map. Kind of a tertiary or a third area of emphasis for us would be the Americas, including some optionality potentially for Canada, but primarily in Latin America. The first deal we made was in the Netherlands. I would say Europe continues to generate our main focus, but we like to have a wide aperture, kind of a wide funnel, we call it, to consider deals in, so we can have the best chance to scour the world in these areas that we've worked in previously and find the best deals for the owners of the company.
With respect to the acquisition environment, this might be my last point, I think, on this slide. You know, we executed the recap with Altura in Q4 2021, and at that time, the commodities were in a pretty strong recovery coming out of COVID, period where you had the lower demand, but you had very little reinvestment. I think it, at least in retrospect, for sure, it was a pretty predictable improvement in prices coming out of the COVID trough that we had. The unusual event build up in the latter part of 2021 and the actual events at the beginning of 2022, was the Russian war on Ukraine. That, of course, led to a very large increase in both oil and overseas natural gas prices.
It was that huge run-up in prices that you had from about Q4 2021 through Q3 2022, that made it a difficult acquisition environment. We were certainly conducting our typical, very detailed, very technically focused, very conservative approach to evaluating and making offers on overseas assets during that year, and we bid on many, many assets. I don't recall the total, but well in access of 100,000 BOED of production. Very little of that set of assets that we bid on, maybe a few percent, actually transacted during that time. It's pretty natural when you think about it. Very, very high prices, very high margins, that the sellers were had for their accounts at that time.
We continued to make conservative offers, as we always do, and as a result, there was a big gulf between what we were offering and what the sellers were demanding for the assets at that time. We find now, though, that we're in a very different market. Prices have settled down. To me, they're still at strong levels with oil in the 70s and European gas trading in the 2023 forwards at CAD 16 per MMBtu, and CAD 18.50 per MMBtu in Cal 2024, in the forward curve. Very strong prices, not at the astronomical levels that you had in the middle of 2022.
In this environment, we can generate quite strong cash flows that would provide very good rates of return at the kind of asset prices that we make offers at, yet the sellers are much more willing to part with the properties and continue their strategic plans for portfolio rationalization, because they don't have this huge price and margin and cash flow stream that they had in the beginning of 2022. We feel we have a very strong transaction pipeline. Those are assets under evaluation, ones that we have offers out on, ones that can be in the negotiation phase.
We think there's a lot better chance to execute transactions in this environment than there would have been in that than there was in that run-up period that I talked about a minute ago. We're confident that when we make a deal at the very value-driven levels that we're talking about with a very careful evaluation, it's got a very good chance of achieving high rates of return. I like the environment that we're in. I like the transaction pipeline that we have. Although, of course, we can't until a deal is at the signing point, we can't give any promise about certainty or the timing of an acquisition. That is the model of the company, and that's what we're continuing as we go forward in 2023.
Before I turn it over for questions, I want to thank again our listeners, our board, our shareholders, and I want to thank our employees in the company. We have, I think, 18 people in Tenaz now in the office, in the field. Got a lot of energy in the company. Everybody works very, very hard, and for me, it's a very exciting place to work, and I'm very honored to work with the group that we have. With that, let's see what we have in the message queue. I'm gonna take one that came in over the IR email inbox earlier today for to be answered at our meeting. Very good question from one of our shareholders. I'll just read it here.
I was watching one of the Altura officers doing a presentation on the Leduc-Woodbend sometime back. In the video, he says there is 1.16 billion OOIP, original oil in place, as documented in the Altura presentation at that time. Question goes on, I heard you say recently that you believe there was around 500 million barrels OOIP, original oil in place. What's the reason for this discrepancy, please? Furthermore, I assume Tenaz has 87.5% ownership of the 500 million to 1.16 billion barrels of original oil, and does Aspenleaf own the remaining 12.5%? I know they have assets in the area. It's a great question. Three parts to it here.
First, relating to Altura's presentation of 1.16 billion original oil in place. Altura made a great discovery in this field, approximately five years ago. Really, a high-quality field, perfect for semi-conventional development, which it recognized and began at that time, and quite a large field, really, considering it's 1,300 meters deep and had been drilled through many times, on the way to deeper targets, glaucanites and all the way down to the Devonian. It's very good for us.
We had all those previous penetrations going right through this field without any development in earnest, 'cause it gives us a lot of data by which to guide the development of the field going forward, all these well trajectories that I was talking about earlier. It's a perfect circumstance for us, shallow depth. It is a big pool and a lot of data, so that we can avoid mistakes to the greatest extent possible as we do our development. The Altura number at 1.16 billion oil originally in place is a mapping. It's a mapping of the entire extent of this Rex, this Rex Member of the Mannville Formation. That is our producing zone.
It goes really covers, I think, the whole area above what is postulated to be the oil-water contact. It includes a number of more distal developments or distal extensions of the field, and it reflects really technically, what can be mapped within this Rex zone. When we report the lower number of a half a billion barrels, roughly, approximately a half a billion barrels originally in place, we are restricting it to the heart of the field, really where our land is concentrated. It doesn't count every barrel or every molecule of oil that exists. It's really just the heart of the field that we're developing in.
In fact, if you look at what we're actually, that we have PDP wells in today, and we have undeveloped and probable locations on the books, per the independent report that we have, I think that that only covers about 200 million barrels of OOIP. There's a big, big field out there. When we're quoting our number, we're not quoting everywhere that there is Rex sand. We're restricting it to the heart of the field, and we've even only booked so far on a minority of that. All the numbers are accurate, but it's just in the way that we elect to represent what is available for us at this point for development.
I hope that answers the questions about the set of numbers out there between the Altura and Tenaz periods here. The last part of this was, basically, what is the working interest ownership in it? We have 7/8, 87.5%. It is not Aspenleaf that has the other eighth. It is true they're in the area to the north of us, doing their own development program, primarily in a different formation than ours. That other eighth is owned by a partner that's been in this project with Altura, beginning a few years ago.
It's a private U.S. company, and been a very good partner for us, and we look forward to continuing the development of the field with them. It is true, we have seven-eighths, and it is a private partner. Let's see if we have any further questions. We do not. I thank everyone for their participation today. I appreciate the question that we had on the IR inbox earlier, and look forward to reporting to you for the in the subsequent quarters as we do our releases. Goodbye.