Core Area Review 2018-08-23T16:25:26+00:00

CORE AREA REVIEW

NORTH EAST BRITISH COLUMBIA

Umbach 110,000 net acres / 19,670 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 112,000 net acres (159 net sections).  During the second quarter, two sections of land were acquired in the Nig area.

There was minimal field activity in the second quarter.  Three horizontal wells (3.0 net) started production in the quarter which left an inventory of seven horizontal wells (7.0 net) that had not started producing at the end of the quarter.

Initial rates from the new horizontal wells at the Nig land block have been very strong.  All three wells from the first pad are now producing with the first starting production on April 10th, the second on June 3rd and the last well on June 28th (approximately 8 Mmcf per day is currently shut in to free up enough facility capacity to be able to produce all three wells).  In July, all three wells were rate restricted with production totaling 26 Mmcf per day raw gas plus 735 barrels per day of field condensate which is an average of approximately 1,680 Boe per day sales per well with 24% liquids including NGL recovered at the gas plant.  The wells at Nig are 60% longer than the average well completed in 2014 to 2016 and 20% longer than the average well completed in 2017.

Fourteen horizontal wells (12.5 net) will be drilled this winter starting early in the fourth quarter of 2018.  Drilling will target areas where gas-condensate ratios are expected to be higher with three wells at West Umbach, six wells at Nig, two wells at South Umbach and three wells at Fireweed.  Horizontal well lengths are planned to be approximately 2,400 metres.

Since 2013, approximately $111 million has been invested in building out infrastructure (pipelines and facilities) with current field compression capacity totaling 115 Mmcf per day raw gas.  Throughput in the second quarter averaged 102 Mmcf per day raw gas.  Capacity will increase to 150 Mmcf per day in the third quarter of 2018 with the installation of an additional compressor at a cost of approximately $2 million (compressor was previously purchased and delivered to site in the first quarter of 2018).  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 and 14% directed to the Stoddart Gas Plant in the second quarter.  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 drill longer wells to improve rates and reserves (future wells will increase to 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 are not 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 – 16

33 hz’s(1)

22 1,270 m $4.3 million

$3,400 per metre

4.9 Mmcf/d

12 hz’s

4.3 Mmcf/d

12 hz’s

3.4 Mmcf/d

12 hz’s

2017

12 hz’s

34 1,750 m $4.2 million

$2,400 per metre

5.0 Mmcf/d

12 hz’s

4.6 Mmcf/d

11 hz’s

4.2 Mmcf/d

5 hz’s

2018

3 hz’s

37 2,090 m $5.4 million

$2,600 per metre

7.1 Mmcf/d

1 hz

  • 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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