Core Area Review 2019-11-14T13:13:07+00:00

CORE AREA REVIEW

NORTH EAST BRITISH COLUMBIA

Umbach/Nig/Fireweed 121,000 net acres / 19,443 Boe/d*

Horn River Basin 80,000 net acres / 0 Boe/d*

*Average daily production nine months ending September 30, 2019

Storm’s land position is prospective for liquids-rich natural gas from the Montney formation and totaled 121,000 net acres (172 net sections) at the end of the quarter with 78 horizontal wells (73.9 net) drilled to date.

Third quarter field activity was mainly focused on the Nig Gas Plant project which included site preparation, delivery of major equipment to the site, and drilling and completing a horizontal well for acid gas disposal.  In addition, completion of a pad at Nig with four horizontal wells (4.0 net) was finished in July and the pipeline tie-in was finished in mid-November after being delayed by rain and wet field conditions.  The four-well pad will evaluate different intervals in the Montney with two wells in the upper, one well in the mid and one well in the lower.

At the end of the quarter, there was an inventory of nine (8.5 net) drilled Montney horizontal wells that had not started producing which included five (4.5 net) completed wells.  During the quarter, there were no new wells that started production.

Field activity in the fourth quarter will include the ongoing construction of the 50 Mmcf per day Nig Gas Plant and finishing the pipeline tie-in of a four-well pad at Nig.

At Umbach (100% working interest), production in the quarter was 16,430 Boe per day with 2,980 barrels per day of liquids (18%) and was reduced by the 14-day unplanned outage at the McMahon Gas Plant.  There are currently four standing wells (4.0 net) with none having been completed.  Produced raw natural gas is sour (1.2% H2S) with approximately 85% directed to the McMahon Gas Plant and 15% to the Stoddart Gas Plant where firm processing commitments total 80 Mmcf raw gas per day (65 Mmcf per day at McMahon plus 15 Mmcf per day at Stoddart).  Field compression capacity totals 150 Mmcf per day raw gas with throughput in the second quarter averaging 94 Mmcf per day raw gas (includes 11 Mmcf per day raw from Nig).

At Nig (100% working interest), production from the three producing wells averaged 2,070 Boe per day with 430 barrels per day of liquids (21%) in the quarter which was reduced by the outage at the McMahon Gas Plant plus the wells were shut in for varying periods to complete an adjacent four-well pad.  At the end of the quarter there were four standing and completed wells (4.0 net) which will start production in mid-November.  Produced raw natural gas contains approximately 0.2% H2S.  The sour gas plant that is under construction has capacity of 50 Mmcf per day and start-up is planned for January 2020.  Total estimated cost of the Nig Gas Plant project has increased to $86 million (was $81 million) with $11 million invested in 2018, $70 million planned for 2019 and the remaining $5 million in 2020.  The project cost increased as a result of a higher cost for site construction as well as scope changes and now includes $77 million for the gas plant, $5 million for an acid gas injection well and $4 million for a sales pipeline.  Sales volume from the gas plant is forecast to be 10,500 Boe per day with an estimated operating cost of less than $2.00 per Boe reducing the corporate operating cost to approximately $4.25 per Boe.  Liquids recovery will improve and is forecast to be 27% of total production from the gas plant (43% condensate, 57% NGL).

At Fireweed (50% working interest), construction of a 50 Mmcf per day field compression facility (expandable to 100 Mmcf per day) is anticipated to begin in mid-2020 with start-up in late 2020 or early 2021.  The estimated cost of the facility is $38 million which also includes an access road and sales pipeline.  There is currently one standing well (0.5 net) with a length of 1,520 metres (36 frac stages) that has been completed which averaged 10.9 Mmcf per day raw gas, 660 barrels per day of field condensate and 1,140 barrels per day of frac water over the last 12 hours of a six-day clean-up (final flowing casing pressure of 4,800 kPa).  Based on production history from offsetting horizontal wells, first year average field condensate-gas ratios are expected to be 30 to 70 barrels per Mmcf raw which is 100% to 400% higher than at Umbach.

A summary of horizontal well results at Nig and Umbach is provided below.  Note that IP90 and IP180 rates are not reliable indicators of relative performance since wells are initially rate restricted for up to nine months to manage fluid rates.  In addition, recent wells have been affected by outages which have totaled 43 days to date in 2019.

Year of Completion Frac

Stages

Completed

Length

 

IP90 Cal Day

 

IP180 Cal Day

 

IP365 Cal Day

Umbach 2014 – 2016

33 hz’s(1)

22 1350 m 4.9 Mmcf/d(2)

19 Bbls/Mmcf(3)

33 hz’s

4.3 Mmcf/d(2)

16 Bbls/Mmcf(3)

33 hz’s

3.4 Mmcf/d(2)

13 Bbls/Mmcf(3)

33 hz’s

Umbach 2017 – 2018

19 hz’s

34 1895 m 4.6 Mmcf/d(2)

24 Bbls/Mmcf(3)

19 hz’s

4.3 Mmcf/d(2)

20 Bbls/Mmcf(3)

18 hz’s

4.1 Mmcf/d(2)

14 Bbls/Mmcf(3)

14 hz’s

Nig 2018

3 hz’s

37 2180 m 8.1 Mmcf/d(2)

29 Bbls/Mmcf(3)

3 hz’s

8.2 Mmcf/d(2)

25 Bbls/Mmcf(3)

3 hz’s

7.5 Mmcf/d(2)

21 Bbls/Mmcf(3)

3 hz’s

  • This table provides analysis of upper Montney wells only (2014 – 2016 wells exclude a middle Montney well).
  • Raw gas rate.
  • Bbls/Mmcf is the field condensate-gas ratio or barrels of field condensate per Mmcf raw.

Based on results from the 2017 and 2018 wells, Storm management is using 8 Bcf and 14 Bcf raw gas type curves (internal estimates) to forecast production at Umbach and Nig respectively.  More detail on well performance and management’s type curve is available in the presentation on Storm’s website at www.stormresourcesltd.com.

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, 2018 or 2019 and no activity is planned for 2020.

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