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 first quarter of 2017 was 16,582 Boe per day and liquids recovery was 36 barrels per Mmcf sales with 60% being higher priced field condensate plus pentanes recovered at the gas plant.  Compared to the previous quarter, production increased by 28% while liquids recovery was the same.

 During the first quarter, six horizontal wells (6.0 net) were drilled, four horizontal wells (4.0 net) were completed and five horizontal wells (5.0 net) started production.  At the end of the quarter, there was an inventory of ten horizontal wells (10.0 net) that had not started producing which included two completed wells.

 Activity in the second quarter of 2017 will include completing four to six horizontal wells (4.0 to 6.0 net).

 Field compression totals 115 Mmcf per day raw gas after start-up of a third facility on January 12, 2017.  Throughput in the first quarter averaged 88 Mmcf per day raw gas.  The third facility had a final cost of $24.6 million for initial capacity of 35 Mmcf per day and will be expanded to 70 Mmcf per day by adding a second compressor for an additional $7.0 million.  Preliminary timing for the expansion is the first half of 2018 and, once completed, total capacity will be 150 Mmcf per day which supports growth in corporate production to approximately 27,000 Boe per day.

 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.  On January 1, 2017, a new processing arrangement started at the McMahon Gas Plant which has a total commitment of 65 Mmcf per day of raw gas for 5 to 15 years and has reduced corporate production costs in the first quarter by 16% from the fourth quarter of 2016.  The arrangement supports future growth with an option to increase contracted capacity and allows continued diversification of natural gas sales with access to three sales pipelines (Alliance Pipeline to Chicago, TCPL system to AECO, T-north to BC Station 2).

 A summary of horizontal well performance and costs is provided below.  Three of the wells completed in 2017 have started producing and have 30 to 60 days of history.  The majority of wells are rate restricted when coming on production to control fluid rates and adding frac stages has increased ‘flush’ production, therefore, additional production data is required to get an indication as to longer term performance.  Future horizontal wells are expected to have completed lengths of 1,700 to 2,100 metres with the newest ball drop completion systems allowing for up to 44 fracs within 4.5 inch casing. 

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*

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

10 hz’s

2016

10 hz’s

25

 1,300 m

$3.8 million

$152 K/stage

5.1 Mmcf/d

10 hz’s

4.8 Mmcf/d

5 hz’s

 

2017

4 hz’s

35

1,670 m

$4.3 million

$123 K/stage

 

 

 

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