First Merit Group is responsible for one of the great success stories in Canadian junior oil and gas Velvet Exploration Ltd. The company was founded on the junior CDNX in 1995 by the First Merit team.
By partnering with the Hobbema First Nation, Velvet gained access to a large under-explored block of land in central Alberta for exploration and development, on which the company initially shot a comprehensive 3D seismic program. The science provided over sixty good oil and gas targets on the land, and, based on that data, Velvet was able to properly fund and develop the area. An experienced management team was installed, who built production and the reserves base steadily throughout the late 1990′s with a series of successful wells.
In 1998, Velvet Exploration graduated to the senior TSE, and in 1999, The Globe & Mail in their Annual Report on Business named Velvet “the most successful public company in Canada”.*
In its five years of operation, Velvet achieved an average success rate for drilling of over 75%, with hundreds of wells drilled. The company drilled 100 wells in the year 2000 alone, and grew production to over 10,000 boe per day.
As a high-value junior oil and gas company, Velvet was an extremely attractive takeover target. In June 2001, Velvet was purchased by El Paso Corporation of Houston, Texas at a price of CAD$8.15 per share for a total purchase price of CAD$432 Million.