Core Area Review 2018-05-16T13:52:29+00:00

CORE AREA REVIEW

NORTH EAST BRITISH COLUMBIA

Umbach 111,000 net acres / 19,708 Boe/d*

Horn River Basin 80,000 net acres / 0 Boe/d*

*Q1 2018 average production

Storm’s land position at Umbach is prospective for liquids-rich natural gas from the Montney formation and currently totals 111,000 net acres (157 net sections).  During the first quarter, two sections of land were purchased at Crown land sales.  To date, Storm has drilled 69 horizontal wells (65.4 net).

Field activity in the first quarter included completing the first three horizontal wells (3.0 net) on the Nig land block and constructing a 12-kilometre gathering pipeline to connect the Nig wells back to the field compression facility. Two horizontal wells (2.0 net) started production in the quarter which left an inventory of 10 horizontal wells (10.0 net) that had not started producing at the end of the quarter including three completed wells.

Preliminary indications from the wells at Nig are encouraging.  One well has started production with the rate being restricted to average 7.3 Mmcf per day raw gas plus 252 barrels per day of free condensate over the first 30 calendar days since start-up on April 10th (approximately 1,480 Boe per day sales including 26% liquids). The remaining two wells will start production over the next three months.  The wells at Nig have average completed lengths of 2,090 metres which is 60% longer than the average well completed in 2014 to 2016 and 20% longer than the average well completed in 2017.

Drilling in the second half of 2018 is expected to be focused on the Nig land block or at South Umbach where condensate-gas ratios are higher.  In addition, horizontal well lengths will be further increased to approximately 2,400 metres.

Since 2013, approximately $111.0 million has been invested in building out infrastructure (pipelines and facilities) with current capacity totaling 115 Mmcf per day raw gas from three field compression facilities.  Throughput in the first quarter averaged 102 Mmcf per day raw gas.  Capacity can be increased to 150 Mmcf per day with the installation of an additional compressor which was purchased and moved to site in the first quarter of 2018 at a cost of $4.7 million (requires additional $2.0 million for installation).  The increased compression capacity would support growth in corporate production to approximately 27,000 Boe per day.

Storm’s produced raw natural gas is sour (approximately 1.2% H2S) with 86% directed to the McMahon Gas Plant in the first quarter and 14% directed to the Stoddart Gas Plant.  Firm processing commitments are 65 Mmcf raw gas per day at McMahon (5 to 15 year terms) and 15 Mmcf per day at Stoddart (1 year term).

A summary of horizontal wells is provided below.  The primary focus since late 2016 has been to improve rates and reserves by drilling longer wells (future wells will be approximately 2,400 metres long).  The majority of wells are initially rate restricted to manage fluid rates and, as a result, the IP90 and IP180 rates may not be indicative of longer term performance.  More information on well performance is available in the presentation on Storm’s website.

Year of Completion Frac

Stages

Completed

Length

Actual Drill & Complete Cost IP90 Cal Day

Mmcf/d Raw

IP180 Cal Day 

Mmcf/d Raw

IP365 Cal Day

Mmcf/d Raw

2014

12 hz’s(1)

19 1,170 m $4.6 million

$3,950 per metre

4.9 Mmcf/d

12 hz’s

4.4 Mmcf/d

12 hz’s

3.5 Mmcf/d

12 hz’s

2015

11 hz’s

22 1,360 m $4.5 million

$3,300 per metre

4.7 Mmcf/d

11 hz’s

4.2 Mmcf/d

11 hz’s

3.3 Mmcf/d

11 hz’s

2016

10 hz’s

25  1,300 m $3.7 million

$2,850 per metre

5.1 Mmcf/d

10 hz’s

4.2 Mmcf/d

10 hz’s

3.5 Mmcf/d

10 hz’s

2017

12 hz’s

34 1,750 m $4.2 million

$2,400 per metre

5.0 Mmcf/d

11 hz’s

4.4 Mmcf/d

8 hz’s

3.9 Mmcf/d

3 hz’s

2018

3 hz’s

37 2,090 m $5.4 million

$2,580 per metre

(1) 2014 wells exclude a middle Montney well (this table provides analysis of upper Montney wells only).

Through a predecessor company Storm began acquiring undeveloped land in the Horn River Basin of northeast British Columbia in 2008. As at December 2017, Storm had 100% working interest in 80,000 acres (119 net sections) which are prospective for natural gas from the Muskwa, Otter Park and Evie/Klua shales. Storm has one producing horizontal well in this area with cumulative production of 5.8 Bcf raw. A core area totaling 30 sections has been proven to be productive through drilling of this well plus two vertical wells that were completed with final test rates of 900 Mcf per day over the final 24 hours of each flow test. Lands within the 30 section area have been continued through drilling and are not subject to expiry. The remaining 89 sections may be subject to expiry over a period of several years beginning in 2020. Storm has no plans for additional activity in the area until there is evidence of a substantial and sustainable increase in natural gas prices.

ALBERTA

The majority of the properties in this area were sold on July 15, 2015 and there remains only one property.  Production in 2017 averaged approximately 60 Boe per day. No capital was invested on this property by Storm in 2017 and no activity is planned for 2018.

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