A workforce lodge in Northeast B.C. owned by Black Diamond Group is converting from rental to a sole customer to an open camp that the company believes is positioned to benefit from continued oil and gas development in the region.
Located in the heart of the Montney play between Fort St. John and Dawson Creek, the 1,244-room Sunset Lodge was likely previously rented to Encana, according to analysts with GMP FirstEnergy.
Going forward it will service Montney producers as well as pipeline builders, general construction, forestry and renewable energy, Black Diamond said in a statement.
It is likely that Encana will also continue to use the facility for drilling activity, GMP FirstEnergy analysts wrote in a research note on Tuesday. The camp market in the Montney region is more competitive than other areas, they added.
“Data from [Black Diamond’s] LodgeLink website suggests that it will look to rent these rooms at $190/night. By comparison, BDI’s large open camp in the oilsands (Sunday Creek) currently has room rates starting at $145/night.”
Sunset Lodge is of the company’s most contemporary facilities, Black Diamond CEO Trevor Haynes said in a statement.
Black Diamond will receive a cash payment of $11.2 million in the transaction, and will assume responsibility for the eventual cost of dismantling the lodge, which GMP FirstEnergy anticipates will be 5 to 10 years away assuming activity levels remain robust.
The property will now be operated through Black Diamond Cygnus, a partnership between the company and the West Moberly First Nations, like the new Montney workforce lodge that Black Diamond opened in December 2017.
