Daylight Resources Trust is a conventional royalty trust that operates in the Western Canadian Sedimentary Basin and is focused on new and mature properties.

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By focusing on both oil and natural gas production, Daylight Resources Trust maintains a balanced portfolio of assets that allows it to shift capital back and forth to take advantage of changing commodity prices. With a multi-year inventory of repeatable, contiguous drilling opportunities, Daylight can operate with “lower geological risk,” Executive Vice President Ted Hanbury says. “That’s really been a mantra for our trust.”

Based in Calgary, Alberta, Canada, Daylight is a conventional royalty trust that operates in the Western Canadian Sedimentary Basin. CEO Anthony Lambert adds that Daylight develops both new and mature properties, which allows it to generate opportunities both for the short term and for the future.

“We’re really not looking, in the classic exploration and processing sense, to drill the high-risk exploratory wells,” Lambert says. Instead, he says, [Daylight] aims for a more solid, lower-risk “sustainable business model.”

Daylight’s Evolution
Chief Financial Officer Steve Nielsen says Daylight’s roots go back to Midnight Oil & Gas Ltd., an oil and gas producer based in Calgary. In November 2004, Midnight acquired Vintage Petroleum Canada Inc. and reorganized itself into two entities: Daylight Energy Trust and Midnight Oil Exploration Ltd.

Although Midnight kept Vintage’s exploratory elements, “95 percent of the producing assets coming out of Vintage went into Daylight Energy Trust,” Nielsen says. In the years that followed, Daylight Energy acquired additional entities to expand and complement its asset base.

Increasing its Depth
Daylight Energy made its most significant transaction in 2006, when it joined with Sequoia Oil & Gas Trust to form Daylight Resources Trust.

“[This] significantly increased the depth and breadth of our operation,” Lambert says. “That transaction increased our size by about 50 percent and brought in a new group of assets with solid exploitation potential.”

Diverse Firm
Today, Daylight is a more than 20,000-barrels-a-day energy trust. Its portfolio includes diverse properties in west central, eastern and southern Alberta, as well as the Peace River Arch area.

Although Daylight drills in developed areas, the trust allows other firms to explore its less developed properties. Recently, an intermediate oil and gas company “put $25 million into [exploring on] our land,” Lambert says.

Although Daylight does not place its own funds into those operations, the trust will still receive 40 percent of the reserves and production found. “[It’s] a good way to create value for our unitholders without having to risk our own dollars,” Nielsen explains.