UMBACH

Umbach, Northeast British Columbia

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, 48 horizontal wells have been drilled (44.4 net) with 41 horizontal wells producing at the end of the third quarter (37.4 net).  Over the last 12 months, the number of producing wells has increased by 9.0 net wells.

Production in the third quarter was 13,130 Boe per day and NGL recovery was 35 barrels per Mmcf sales with 53% being higher priced field condensate plus pentanes recovered at the gas plant.

During the third quarter, three horizontal wells were completed (3.0 net) and two horizontal wells (2.0 net) started production.  At the end of the third quarter, there was an inventory of seven horizontal wells (7.0 net) that had not started producing which included one completed well.  Activity in the fourth quarter will include drilling five horizontal wells (5.0 net) and completing five horizontal wells (5.0 net).

Storm’s two operated field compression facilities have total capacity of 80 Mmcf per day raw gas with actual throughput in the third quarter averaging 69 Mmcf per day raw gas.  Construction has started on the third field compression facility with initial capacity of 35 Mmcf per day and start-up is planned for January 2017.  The estimated total cost is unchanged at $25.0 million with $4.8 million incurred in 2015, $19.0 million in 2016, and the remainder planned for 2017.  The third facility is expandable to 70 Mmcf per day raw gas for an additional investment of $7.0 million.

Raw gas from Storm’s field compression facilities is sent to the McMahon and Stoddart Gas Plants where firm processing commitments average 75 Mmcf per day raw gas in 2017.  This includes the recently announced natural gas processing arrangement with Spectra which has an effective date of January 1, 2017 and a total commitment of 65 Mmcf per day of raw gas at terms ranging from 5 to 15 years.  The arrangement with Spectra represents a significant step forward by reducing operating costs, supporting future growth with an option to increase contracted capacity, and provides for continued diversification of natural gas sales with access to three sales pipelines through the McMahon Gas Plant (Alliance Pipeline to Chicago, TransCanada NGTL system to AECO, Spectra T-north mainline to BC Station 2).

A summary of horizontal well performance and costs is provided below.  On a per-stage basis, the drill and complete cost for 2016 wells has decreased by 25% from 2015.   

Year of Completion

Frac

Stages

Completed

Length

Actual Drill & Complete Cost

IP 90 Cal Day

Mmcf/d Raw

IP 180 Cal Day 

Mmcf/d Raw

IP 365 Cal Day

Mmcf/d Raw

2013

6 wells

17

1,190 m

$4.6 million

$270 K/stage

3.5 Mmcf/d

6 hz’s

2.9 Mmcf/d

6 hz’s

2.2 Mmcf/d

6 hz’s

2014

12 wells*

19

1,170 m

$4.6 million

$240 K/stage

4.9 Mmcf/d

12 hz’s

4.4 Mmcf/d

12 hz’s

3.5 Mmcf/d

12 hz’s

2015

11 wells

22

1,360 m

$4.4 million

$200 K/stage

4.7 Mmcf/d

11 hz’s

4.2 Mmcf/d

9 hz’s

 

2016

5 wells

27

1,410  m

$4.0 million

$148 K/stage

5.7 Mmcf/d

2 hz’s

 

 

   * 2014 wells exclude a middle Montney well (comparing upper Montney wells only).

The majority of future horizontal wells are expected to have greater than 1,600 metres of completed length with more than 30 frac stages while the average 2014 and 2015 wells have a completed length of 1,265 metres and an average of 21 frac stages.  More information on the type curve and well economics is provided in the presentation on Storm’s website.