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Encana
IRRs of over 100% on lower D&C costs
October 5, 2016 |
Seven Generations
Low condensate-rich Montney breakeven
October 3, 2016 |
Tourmaline
Montney has highest reserves & NPV
September 9, 2016 |
Murphy
Growth potential driving M&A
September 8, 2016 |
Encana, the largest Montney producer, has 5,900 premium condensate-rich drilling locations in its Tower and Dawson South projects in BC and Pipestone project in Alberta. Drilling and completion costs were 33% lower in the second quarter 2016 than its 2015 average, driven by a 30% reduction in cycle time and 55% lower domestic frac sand costs. That is giving it an after tax internal rate of return of 120% on its Pipestone acreage, where its type curves show daily production of 850 b/d of condensate along with 2.7 MMcf/d of gas. |
The first focus of Seven Generations Energy, the sixth largest Montney producer, was the Kakwa area of the play about 100 km south of Grande Prairie. It recently closed the C$1.9 billion acquisition of Paramount's Kakwa Montney assets, picking up 30,000 boe/d and nearly 100,000 net acres. Driving one of the largest Canadian asset deals of the year was improving economics of the play, where Paramount reported a 26% reduction in drilling costs per lateral meter and 65% decrease in completion costs since 2014. In its October 2016 investor presentation, it said that the breakeven in the play was among the lowest among all liquids-rich North American plays. |
Tourmaline Oil Corp., the fifth largest Montney producer, focuses on the gas/condensate part of that play as well as the Alberta Deep Basin and the Peace River High Charlie Lake light oil and gas resource play. The company is forecasting a 2016 exit rate of over 200,000 boe/d, while drilling & completion and operating costs have fallen by more than 50%. Its economics in the B.C. Montney stand out, as the company averages the highest reserves per well (6.1 Bcfe) at an average well cost of just C$2.9 million. Tourmaline’s success led to the October 19, 2016 announcement that it was acquiring C$1.4 billion in Western Canadian assets from Shell, its largest acquisition since 2010. |
Murphy Oil has been one of the top ten Montney producers from its dry gas Tupper and Tupper West fields, which represent 36% of its 421 MMboe in North American onshore reserves. While the AECO price has dipped below its C$2.10/Mcf breakeven price, hedging at an average of C$3.00/Mcf has kept its operation profitable. However, the improving gas/condensate economics led to its recent decision to sell its Montney midstream assets for C$539 million and apply the proceeds to its C$486 million cash and carry joint venture with Athabasca Oil that will give it a 70% working interest in the Kaybob Duvernay play and a 30% working interest in the Placid Montney play. |
