Core Area Review 2018-03-23T17:24:21+00:00

CORE AREA REVIEW

NORTH EAST BRITISH COLUMBIA

Umbach 109,000 net acres / 17,750 Boe/d*

Horn River Basin 80,000 net acres / 77 Boe/d*

*Q4 2017 average production

Storm’s land position at Umbach is prospective for liquids-rich natural gas from the Montney formation and currently totals 109,000 net acres (155 net sections).  To date, Storm has drilled 69 horizontal wells (65.4 net).

Liquids recovery during the fourth quarter was 39 barrels per Mmcf sales (57% being higher priced condensate), an increase from 36 barrels per Mmcf sales last year.

Activity in the fourth quarter included completing three horizontal wells (3.0 net) and drilling seven horizontal wells (7.0 net).  Notably, the horizontal drills had an average length of 2,090 metres, an increase of 57% from the average length of the wells drilled in 2014 to 2016.  Five horizontal wells (5.0 net) started production which left an inventory of 12 horizontal wells (12.0 net) that had not started producing at the end of the quarter including two completed wells.  During 2017, 13 horizontal wells (13.0 net) started producing with these wells adding 7,730 Boe per day in the fourth quarter.

With drilling focused in the south and to the northwest, the condensate-gas ratio on the 2017 wells is approximately 30% higher than on the 2014 to 2016 wells.  This has resulted in corporate liquids production increasing at a higher rate than natural gas production.

Since 2013, approximately $100.0 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 fourth quarter was 93 Mmcf per day raw gas (December averaged 100 Mmcf per day).  Capacity can be increased to 150 Mmcf per day by installing additional compression which was purchased and moved to site in the first quarter of 2018 at a cost of $5.0 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 81% directed to the McMahon Gas Plant in the fourth quarter and 19% directed to the Stoddart Gas Plant.  Firm processing commitments total 65 Mmcf raw gas per day with terms of 5 to 15 years at McMahon and 15 Mmcf per day until April 2018 at Stoddart.

A summary of horizontal wells is provided below.  The wells completed in 2017 are 38% longer than 2014 to 2016 wells while the drilling and completion cost per meter decreased by 16% from 2016.  Results to date from the 2017 wells are very encouraging even though this is not apparent from IP90 and IP180 rates as the majority of wells are initially rate restricted to manage fluid rates.  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 meter

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 meter

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 meter

5.1 Mmcf/d

10 hz’s

4.2 Mmcf/d

10 hz’s

3.5 Mmcf/d

7 hz’s

2017

12 hz’s

34 1,750 m

$4.2 million

$2,400 per meter

4.9 Mmcf/d

8 hz’s

4.4 Mmcf/d

5 hz’s

4.4 Mmcf/d

2 hz’s

2018

3 hz’s

37 2,090 m

$5.3 million

$2,550 per meter

     

(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. Storm has 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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