UMBACH

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 59 horizontal wells (55.4 net).

Production in the second quarter was 13,703 Boe per day and liquids recovery was 39 barrels per Mmcf sales with 56% being higher priced condensate.

Activity in the second quarter included pipelining and equipping a second water disposal well and adding a second fuel gas conditioning unit which is required for the future expansion of the third field compression facility.  One horizontal well (1.0 net) started production.  At the end of the quarter, there was an inventory of nine horizontal wells (9.0 net) that had not started producing which included one completed well.

There are three field compression facilities with current capacity totaling 115 Mmcf per day raw gas and throughput in the second quarter averaged 69 Mmcf per day raw gas (92 Mmcf per day in April and May).  Capacity at the third facility can be increased by 35 Mmcf per day by adding a second compressor for $7 million.  Delivery of the second compressor is scheduled for the fourth quarter of 2017 with installation planned for the first half of 2018, possibly as early as January depending on commodity prices and well results.  This increases total field compression to 150 Mmcf per day and supports growth in corporate production to approximately 27,000 Boe per day.

Storm’s produced natural gas is sour (approximately 1.2% H2S) and is directed to the McMahon and Stoddart Gas Plants where firm processing commitments total 80 Mmcf per day raw gas for the second half of 2017.  At the McMahon Gas Plant, a new processing arrangement began in January 2017 and has a commitment totaling 65 Mmcf per day of raw gas for 5 to 15 years.  The arrangement reduced corporate production costs by approximately 15%, supports future growth with an option to add up to 35 Mmcf per day, and provides access to three sales pipelines.  Most importantly, the arrangement will result in accelerated corporate growth as more capital can be directed to drilling and completing horizontal wells which offer a higher rate of return than building a sour gas plant.

A summary of horizontal well performance and costs is provided below.  Calendar day rates for the 2016 and 2017 horizontal wells were reduced by the McMahon Gas Plant turnaround from June 5 to July 14.  For example, the three 2017 wells produced for an average of 75 days out of the first 90 calendar days.  Future horizontal wells will have completed lengths of 1,700 to 2,100 metres with 30 to 36 frac stages and the increased length is expected to improve production rates.

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

2013

6 hz’s

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 hz’s(1)

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 hz’s

22

1,360 m

$4.4 million

$200 K/stage

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

$148 K/stage

5.1 Mmcf/d

10 hz’s

4.2 Mmcf/d

10 hz’s

3.7 Mmcf/d

2 hz’s

2017

4 hz’s

35

1,670 m

$4.3 million

$123 K/stage

4.8 Mmcf/d(2)

3 hz’s

 

 


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

(2)  Wells produced for an average of 75 days due to the McMahon maintenance turnaround June 5 to July 14.