duvernay esb drill bits final march 13€¦ · wti break even (10% return, us$/bbl) $18.5 $13.5...

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Drill BitsEast of the Reef – Duvernay Oil Play

BMO Capital Markets – Energy – A&D Advisory

Spring 2019

Production by Area, Cal boe/d (85% liquids, 137 wells producing)

East Shale Basin – Duvernay Tight-Oil Fairway Map(1) Overview

• World-class rock characteristics combined with a massive resource in-place

− The Duvernay oil fairway within the study area has significant resource potential with an estimated 5 to 25+ MMbbl/section and over >75 Billion bbl oil in place

− A light oil resource with API gravities between 36o and 45o

− Thick, over-pressured reservoir with high total organic content (TOC), favourablemineralogy, and low water saturation

• Recent improvements in completion and well design are resulting in top tier prolific wells with IP30 >400 bbl/d and increases expected upon additional optimization

• Advances in drilling efficiency are improving well economics resulting in return rates of >65%

− Shallower drill depths (<2,600 m) vs. the Kaybob area in the West Shale Basin result in lower capital costs

• Leading North American netbacks of over C$30/boe at current WTI of US$55/bbl - underpinned by strong realized prices (~70-90% liquids weighting), low operating/transportations costs and favourable royalties

A&D Drill BitsPage 1

East Shale Basin Duvernay – Canada’s New Light Oil Play

The East Shale Basin Duvernay Continues to Gain Momentum and is Quickly Evolving its Position to Become One of the Premier Oil Resource Plays in North America

Source: geoSCOUT, GeoEDGES, BMO Capital Markets(1) Operators use a variety of strike names within each embayment

WesterdaleEmbayment

Ghost Pine Embayment

Emerging Area

0

4,000

8,000

12,000

16,000

20,000

2014 2015 2016 2017 2018

Emerging Ghost Pine Westerdale

West Shale Basin

Rapid production growth since 2016

East Shale Basin

Joffre

Cygnet

Huxley

Ferrier

Westerose

Willesden Green

Twining

Pembina

Trochu

3.1

2.2

1.7

1.5

1.4

1.4

1.2

Eagle Ford

DJ Basin

Delaware

Emerging

Midland

Ghost Pine

Westerdale

Half Cycle Payout (Years)

$45

$36

$34

$34

$32

$30

$28

Eagle Ford

DJ Basin

Emerging

Ghost Pine

Westerdale

Delaware

Midland

WTI Break Even (10% Return, US$/bbl)

$18.5

$13.5

$11.3

$7.0

$6.7

$6.6

$6.3

Delaware

Midland

Eagle Ford

Emerging

Ghost Pine

Westerdale

DJ Basin

$29

$30

$30

$32

$33

$36

$38

Midland

Delaware

DJ Basin

Ghost Pine

Emerging

Eagle Ford

Westerdale

Operating Netback (C$/boe)

23%

38%

53%

66%

67%

70%

87%

Eagle Ford

DJ Basin

Delaware

Emerging

Midland

Ghost Pine

Westerdale

Half Cycle Pre-Tax IRR(%)

25.0%

25.0%

25.0%

18.8%

5.6%

5.1%

5.0%

Delaware

Midland

Eagle Ford

DJ Basin

Ghost Pine

Westerdale

Emerging

Effective Royalty Rate (% Initial 5 Years)


Highly Economic Shale Oil Play

East Shale Basin Duvernay – Competitive with the Best Plays in North America

Source: BMO Capital Markets; Based on flat prices with US$55/bbl WTI and C$1.68/MMBTU AECO, US$2.75/MMBTU HH, $0.76 CAD/USD; US$10/bbl differential to Edm LightDuvernay well costs reflect pad development; single delineation wells are estimated to cost an additional ~40%

Duvernay

Montney

DJ Basin

Midland

Delaware

Eagle Ford

East Shale Basin

Reflects Pad Development

Quick Payout< 1.5 Years

Favourable Crown Royalty Rate

High Return Rates

> 65%

High Netbacks

> C$30/boe

Break Even Oil Price US$32/bbl to

US$34/bbl

North America Shale Basins DCE&T (C$ MM Per Well)

A

A’

A’Twining: 102/10-18-031-25W4/00Westerdale: 100/08-20-038-28W4/02Willesden Green: 100/03-32-040-05W5/02A


Core Analysis Shows Highly Complex Depositional Systems…

Source: geoSCOUT, GeoEDGES, BMO Capital Markets; AER Core Analysis; GLJ Petroleum Consultants Setting the Stage: Overview of the Duvernay Sub-Plays, March 8, 2018 Presentation

Commentary

• The Ghost Pine and Westerdale embayments are carbonate dominated systems with interbedded organic-rich horizons

• Both regions have similar mixed porosity elements with conventional carbonate porosity beds between the organic horizons, which may provide better hydrocarbon deliverability

• The mineralogy of the Emerging oil play at Willesden Green is more siliceous with lower carbonate values, showing a different sediment source to the Westerdale and Ghost Pine embayments. Also notable is the more pervasive TOC. Core (next page) shows the dark black nature of the shale with fewer carbonate intervals

• With over 85 metres of pay in Westerdale and Ghost Pine areas, operators are initially placing their wellbores within the top 5 to 20 metres of the Duvernay package, and testing in the lower benches is just beginning

• Ongoing drilling and reservoir testing will increase resource confidence and reserves

Bas

haw

Ree

f Co

mpl

ex

Rim

bey

-Le

duc

Ree

f Co

mpl

ex

102/07-06-041-05W5/03

Repsol102/07-06-041-05W5/03IP30: 885 Mcf/d (on Sept 2015)

Vesta Energy100/01-20-038-28W4/00IP30: 203 bbl/d (on Oct 2012)

100/01-20-038-28W4/00 100/03-30-031-25W4/00

85 m

Pay

Datum: Top of Duvernay

Ghost PineWesterdale

Artis Exploration100/03-30-031-25W4/00IP30: 432 bbl/d (on Nov 2017 )

60 m

Pay

Twining: 102/10-31-033-24W4/00

18 m

Pay

102/10-31-033-24W4/02

Artis Exploration102/10-31-033-24W4/00IP30: 292 bbl/d (on Jan 2018)

70 m

Pay

Emerging

Horizontal OilHorizontal GasCore photo

31

0.08 1.2 1.7

94

158

25

0

20

40

60

80

100

Carbonate % TOC % Total Porosity % Clay Content %

40

7 2 2

92

94

37

0

20

40

60

80

100


20

1 210

98

2010

30

0

20

40

60

80

100


20

32 5

80

10 6

35

0

20

40

60

80

100


Twining: 102/10-18-031-25W4/00Willesden Green: 100/03-32-040-05W5/02 Westerdale: 100/08-20-038-28W4/02


…And Subtle Rock Changes In Each Embayment

Select Core Samples with Unique Features

Pre-existing fracture network High carbonate for

greater fracabilityHigh TOC, variable carbonate

Source: Core analysis chart data is from the entire core; AER Submissions; BMO Capital Markets; 102/10-31-033-24W4 core data courtesy Artis

Siliceous, low porosity, organic-rich shale

Ghost PineWesterdale

20 c

m -

TOP

3,25

9.2

m

10 c

m -

TOP

2,59

8.0

m

10 c

m -

TOP

2,39

7.0

m

Carbonate rich clasts within a

dark shale matrix

Highly fractured shale with thin

laminae of carbonate

Thick section of massive, siliceous,

black, high TOC shale with thin

laminae of carbonate

Limited carbonate interbedding due

to onshore sediment source

Variable TOC along length of core

MaxMinAvg

MaxMinAvg

3,260 m TOC 9.58%

Carbonate beds have nodular

texture

MaxMinAvg

42.6

2.917.1

74.0

2.311.0

5.2

56.4

16.68.2

MaxMinAvg66.0

3.611.0

10 c

m -

TOP

2,24

6 m

Twining: 102/10-31-033-24W4/00

Soft sediment deformation

Calcite healed fractures

Emerging

Simulated Total Organic Carbon(1)Simulated Net Thickness(1)Simulated Depth to Top Duvernay(1)


AER – Resource Study Maps

1.1 - 1.52.1 - 2.53.1 - 3.5

0.6 - 1.01.6 - 2.02.6 - 3.03.6 - 4.0

TOC (wt%)0.5 - 1020.1 - 3040.1 - 5060.1 - 7080.1 - 90

10.1 - 2030.1 - 4050.1 - 6070.1 - 8090+

Net Isopach (metres)

1,501 - 2,0002,501 - 3,000

1,001 - 1,5002,001 - 2,5003,001 - 3,500

Depth to Duvernay (metres)

Source: AER, geoSCOUT, GeoEDGES, BMO Capital Markets(1) AER/AGS Open File Report 2017-02; Hydrocarbon Resource Potential of the Duvernay Formation in Alberta – Update; figures: 14 (Depth), 17 (Net Thickness), 19 (TOC)(2) Possible wells used in AER Resource Study - Duvernay wells rig released prior to June 30, 2016

Deepest Duvernaygets highest C*

Thick Duvernayhas potential for multiple benches

Significant TOC remains across

the fairway

West Shale Basin

East Shale Basin

• The Duvernay Formation dips to the southwest • Shows a major thickening of the Duvernayto the southeast reaching up to 100 metresin Westerdale

• High TOC across the entire Duvernay Formation

Original Gas in Place (P50 Estimate)(1) Original Oil in Place (P50 Estimate)(1)Original NGL in Place (P50 Estimate)(1)


Where Is The Oil?

0.0 - 5.010.1 - 15.020.1 - 25.0

5.1 - 10.015.1 - 20.025.1 - 30.0

OOIP MMbbl per section0.0 - 20.040.1 - 60.080.1 - 100

20.1 - 40.060.1 - 80.0

OGIP Bcf per section0.0 - 2.04.1 - 6.08.1 - 10.0

2.1 - 4.06.1 - 8.010.1 - 12.0

NGL in Place MMbbl per section

Source: AER, geoSCOUT, GeoEDGES, BMO Capital Markets(1) AER/AGS Open File Report 2017-02; Hydrocarbon Resource Potential of the Duvernay Formation in Alberta – Update; figures: 24 (OGIP), 25 (NGL in Place), 26 (OOIP)(2) Possible wells used in AER Resource Study – Duvernay wells rig released prior to June 30, 2016

Recent Oil Production

Oil Window Expands Further Into The West Shale Basin

• The maps shown here are taken from the AER’s 2017 Duvernay Resource report, which utilized new data allowing for more robust and new mapping of reservoir attributes compared to the first report published seven years ago

• Considering this second report was published in mid 2017, the data used was circa 2016 when testing of the East Shale Basin was in its infancy

• Significant activity in the oil fairway has occurred in the last two years, providing more certainty of oil resource-in-place

• Should the AER reassess the Duvernay, its likely that the OOIP estimate will increase, especially in areas with proven oil production

West Shale Basin

East Shale Basin

Reservoir Pressure Data & Depth

Confidential Status (Well Count)

Well Activity Oil Fairway Activity Map


Exploring The Extent Of The Oil Fairway

Over-Pressured Reservoir with the Oil Fairway Seeing a Majority of Recent Activity

Emerging AreaWesterdale EmbaymentGhost Pine Embayment

Pressure Data

Source: geoSCOUT, GeoEDGES, BMO Capital MarketsNote: All figures are based on data available in the public domain as of February 25, 2019

1,300

4,000

Depth (m)

0 2,500 5,000 7,500 10,000

4,921

6,561

8,201

9,841

11,481

13,121

1,500

2,000

2,500

3,000

3,500

4,000

0 20,000 40,000 60,000 80,000

Pressure (psi)

Dep

th (f

eet)

Dep

th (m

etre

s)

Pressure (kPa)

Emerging

Westerdale

Ghost Pine

WesterdaleEmbayment


Emerging Area

• Over-pressured across all three regions

• Linear relationship between reservoir pressure and depth

• More than 230 wells have been drilled in the East Shale Basin since 2012, with the majority being drilled by Vesta in the Westerdaleembayment

Drilling activity in the East Shale Duvernay saw

rapid growth in 2018

Duvernay Oil Fairway – Land Situation Map Crown and Freehold Checkerboard and Limited Public Well Information

• There is a combination of Freehold and Crown lands across all three embayments in the Duvernay Oil Fairway play

• Crown lands typically have long tenure; a two year license can roll into a five year lease term with minimal capital spend. This allows operators to be reactive and more strategic with their drilling schedules to hold lands and not be on the drilling “treadmill”

• Crown Lands benefit from drilling incentives (C*) and often result in lower royalty rates

• Crown lands are tightly held in the heart of the play. Remaining open Crown in the oil window is in the un-tested northern regions where the most recent land sales have been located

• Freehold lands can have a variety of different terms that are directly agreed upon between the parties involved. In general, leases tend to have higher royalty rates than Crown and are less likely to receive offset notices to drill

• Although Freehold agreements are not publicly available, it is likely that there is little unleased Freehold in the core of the play

• Freehold lessors have recognized the need to be competitive with Crown royalty structures, with the result they are adjusting their agreements to attract more drilling

• Exploration wells remain confidential for a year giving operators a strategic advantage in that their drill, complete, test and production details will remain proprietary

• There are more than 110 confidential Duvernay wells – these nearly outnumber the wells with publicly available data, which is why every well released from confidential status is closely watched


Advantages & Challenges With Green-Field Plays

There is Limited Public Production Available with more than 110 Wells Coming Off Confidential Status in the Next Year

Source: geoSCOUT, GeoEDGES, BMO Capital MarketsNote: All figures are based on data available in the public domain as of February 25, 2019

City of Red Deer

West Shale Basin

East Shale Basin

WesterdaleEmbayment


Emerging Area

PrairieSkyFreehold

PrairieSkyFreehold

Independent Freehold Owners

477450

420406

134127

9886

625855

4834

13

VestaBaytex

Crescent Point -Artis

Teine -Outlier

ChronosJourney-Kiwetinohk -

TraverseParamount -

Repsol -InPlay

RifeMancal

WesterdaleGhost PineEmerging

Duvernay Sections Shown On Map

Duvernay Oil Fairway – Operator Map


Who Are The Players?

Nearly All the Land Within the Three Areas is Currently Held

Source: geoSCOUT, GeoEDGES, BMO Capital Markets, public disclosure and corporate presentations (based on available data as of February 25, 2019)(1) Includes acreage shown on the map up to Township 50(2) Journey-Kiwetinohk JV, Paramount and Repsol section counts only include land in the Emerging Oil Area closest to the Rimbey Leduc Trend

The Players are in Place and Production is Underway

• The East Shale Basin Duvernay is a highly active emerging oil resource opportunity in Western Canada; several private and public companies have amassed considerable land positions

• Vesta, Artis and Baytex are the most active in the play

− Vesta continues to be the clear leader driving activity with 42 wells being drilled in 2018

− Excellent results from Artis in Ghost Pine embayment with recent wells showing >500 bbl/d IPs; partnered with Crescent Point on some lands on the south edge

− Baytex has amassed a meaningful position in the Emerging Area in West Shale Basin and in the East Shale Basin (north of Vesta acreage)

• Most of the prospective Crown and Freehold land is now held

• Producers starting to develop the oil window in the West Shale Basin (led by Baytex and Paramount), with recent land sales focused on the remaining acreage in this window

(1)

(2)

(2)

(1)

(2)

West Shale Basin

East Shale Basin

WesterdaleEmbayment


Emerging Area

Estimate of Possible Future Inventory Using 6 Wells Per DSU(1)

1,144

1,080

1,007975

322 304

236206

149 139 132 11682

31

0

200

400

600

800

1,000

1,200

Poss

ible

Inve

ntor

y an

d C

urre

nt S

ituat

ion

Westerdale Ghost Pine Emerging RR'd Licensed

Duvernay Oil Fairway – Resource Overview


Well Activity By Producer & Regional Potential

Massive OOIP with Large Potential Inventory Within Each of the Embayments

Source: geoSCOUT, public disclosure and corporate presentations (based on available data as of February 25, 2019)(1) Future Inventory assumes one platform (bench) developed with 2 mile laterals, 6 wells per 2 section DSU and 80% utilization factor on company held sections

• The number of wells drilled today represents <3% of the total inventory on the company acreages shown above at 6 wells per DSU

• The upside inventory could exceed >12,000 locations on the publicly disclosed company acreages assuming tighter well spacing or multiple benches

31 – 35 Bbbl OOIP (18 – 20 MMbbl/sec)


Thinning Reservoir

Thickening reservoir but approaching condensate

window

Decreasing reservoir pressure


1 – 3 Oil Benches

1 – 2 Oil Benches

1 – 2 Oil Benches Potential inventory of ~6,000 locations(1)

Ghost Pine Embayment Overview Map


Ghost Pine Activity & Recent Well Results

Top Performing Wells in West Ghost Pine With Near Term Activity Proving up East Ghost Pine

North Key WellArtis 02-26-034-24W4

On: 2017/12/202,693 m LL

Oil IP30: 384 bbl/d (choked back) Crescent Point 102/14-11-034-23W4

On: 2018/06/102,782 m LL

Initial Oil IP30: ~115 bbl/d

Mancal 15-14-035-23W4 API 38O

On: 2018/03/133,200 m LL

Oil IP30: 134 bbl/d

South Key WellArtis 11-27-031-25W4/02

On: 2017/09/282,352 m LL & 4,830 t Proppant

Oil IP30: 567 bbl/d

Artis 103/02-29-031-24W4On: 2017/04/012,298 m LL & 5,175 t Proppant

Oil IP30: 520 bbl/d

Artis & Crescent Point PartnershipEarly stage development with no production

results, therefore no type curve available

Source: geoSCOUT, GeoEDGES, BMO Capital MarketsNote: All figures are based on data available in the public domain as of February 25, 2019Includes all activity prior to February 25, 2019 and wells that have been spud, drilled and/or rig released

Chronos102/05-04-035-22W4/02 &103/06-04-035-22W4/ Spud Oct 2018100/09-13-037-23W4/ Spud Nov 2018

Artis 01-11-034-24W4 API 36O

On: 2015/04/071,558 m LL & 1,448 t Proppant

Oil IP30: 258 bbl/d

Artis 13-11-031-25W4On: 2017/10/112,327 m LL & 4,770 t Proppant

Oil IP30: 505 bbl/d

Artis 102/14-06-032-24W4 API 40O

On: 2017/01/012,110 m LL & 4,645 t Proppant

Oil IP30: 560 bbl/d

Artis 09-05-033-24W4 API 37O

2,434 m LLOil IP30: 153 bbl/d

Artis 12-32-035-24W4On: 2018/08/122,524 m LL

Oil IP30: 268 bbl/d

2018 Activity

Artis 100/04-15-031-24W4 API 42O

Type Curves

0

5

10

15

20

25

30

0 6 12 18 24 30 36 42

Cal

Day

Oil

Rat

e pe

r 100

m L

L (b

bl/d

)

Month

Ghost Pine South

Ghost Pine North

Type Curve Parameters and Economic Results (Crown Royalty)

Ghost Pine North

Ghost Pine South

Ghost Pine North

Ghost Pine South

IP30 (bbl/d) 409 593 BT-NPV@10% ($MM) $2.7 $7.0

Ult Rec (Mboe) 362 568 IRR (%) 27% 70%C2 - C4 (bbl/MMcf) 64 64 Payout (yrs) 2.9 1.4C5+ (bbl/MMcf) 14 14 P/I (@10%) 0.4 1.1

GOR (scf/bbl) 450 - 550 800 - 1,140

Capital ($MM) $6.7 $6.7 C* ($MM) 12.5 13.3

Fixed Costs ($/well/month) $9,000 $9,000 Lateral Length (m) 3,000 3,000

Variable Oil Costs ($/bbl) $4.20 $4.20 Total Proppant (t) 5,250 5,250

Variable Gas Costs ($/Mcf) $0.40 $0.40 TVD (m) 2,230 2,340


Ghost Pine – Type Curve & Economics

High Rates in the South Resulting in Strong Returns of 70%

South Type Curve Economic Sensitivities

Commentary

• The Ghost Pine embayment has seen less drilling/licensing activity than Westerdale, but recent well and land sale results suggest activity will increase

• Core Duvernay land rights are fully held within the area

• Artis has been the most active company in Ghost Pine since the area was originally tested in 2015 but additional operators such as Chronos, Crescent Point and Outlier are further delineating the area

• Public data indicates that production rates within the Ghost Pine embayment are highly comparable to results seen within the more active Westerdaleembayment

$40/bbl

+20%

481 bbl/d

1,235

$1.10

$70/bbl

-20%

711 bbl/d

820

$2.10

0 25 50 75 100 125 150 175

WTI Oil Price (US$/bbl)

Capital ($MM)

IP (30-day, bbl/d)

GOR (scf/bbl)

Gas Price ($/GJ)

$55/bbl

593 bbl/d

1,027 scf/bbl

$1.60/GJ

$6.8MM

Rate of Return Sensitivity on Base Type Curve: BT-NPV10 = $7MM; IRR = 70%

Change in IRR from base value of 70%

Source: geoSCOUT, BMO Capital Markets, Verdazo Analytics, Economics evaluated using Value Navigator 2017, Company Public DisclosuresNote: Based on flat prices with US$55/bbl WTI and C$1.68/MMBTU AECO, $0.76 CAD/USD; US$10/bbl differential to Edm Light

Freehold Royalty: 10%

IP30 – 593 bbl/dNPV10 – $7.0MMIRR – 70%EUR – 568 Mboe


Westerdale Embayment Overview Map


Westerdale Activity & Recent Well Results

Vesta is the Most Active Operator With >100 Wells Drilled to Date and High Production Performance Across Their Land Base

Vesta 102/11-33-037-28W4On: 2018/04/043,142 m LL

Oil IP30: 595 bbl/d

South Key WellsVesta 08-15-039-28W4/02

On: 2018/01/09 3,073 m LL Oil IP30: 764 bbl/d

102/07-15-039-28W4 On: 2018/09/23 3,051 m LL

Oil IP30: 743 bbl/d

Baytex 02-20-043-25W4On: 2018/07/19 3,242 m LL

80 boe/d (77% oil and NGLs)

Active South Extension17 wells Drilled in 2018 (6 cased wells)5 well licenses


North Key WellsVesta 102/08-02-040-27W4

On: 2018/10/033,552 m LL Oil IP30: 693 bbl/d

04-01-040-27W4/05 On: 2018/07/063,779 m LL Oil IP30: 536 bbl/d

09-02-040-27W4 On: 2018/09/17 3,434 m LL Oil IP30: 532 bbl/d

Vesta 100/01-22-040-27W4 API 44O

& 06-14-040-28W4/02 API 42O

Vesta 100/ & 102/15-06-039-27W4On: 2018/04/08 & 2018/03/213,174 & 3,213 m LL

Oil IP30: 572 & 537 bbl/d

Vesta 103/14-01-040-28W4/03On: 2017/10/243,035 m LL & 4,731 t Proppant

Oil IP30: 374 bbl/d

Vesta 102/14-13-039-28W4On: 2018/06/293,069 m LL

Oil IP30: 565 bbl/d

Vesta 100/02-09-037-28W4/02 &102/02-09-037-28W4/04 API 43O

On: 2018/06/053,037 & 3,047 m LL

Oil IP30: 524 & 556 bbl/d

Baytex 04-11-044-27W4/02On: 2017/11/062,226 m LL

Oil IP30: 198 bbl/d

Vesta 100 & 102/16-06-039-27W4On: 2018/8/183,135 & 3,139 m LL

Initial Oil IP30: 634 & 685 bbl/d

2018 Activity

Vesta 05-24-040-27W4/02On: 2018/02/233,209 m LL & 7,150 t Proppant

Oil IP30: 409 bbl/d

Vesta 10-05-041-27W4On: 2017/11/023,051 m LL

Oil IP30: 400 bbl/d

Type Curves

0

5

10

15

20

25

30

0 6 12 18 24 30 36 42

Cal

Day

Oil

Rat

e pe

r 100

m L

L (b

bl/d

)

Month

Westerdale South

Westerdale North



Westerdale – Type Curve & Economics

Impressive IRR of 46% to 87% Based on Current Pad Well Costs


Commentary

• The Westerdale embayment has been the most active part of the East Shale Basin, predominantly driven by Vesta’s development

• Vesta has seen better well performance with increased sand density and lateral lengths

• Recent wells have increased over 25% in the past few years to an average of 3,300 m; the longest well drilled by Vesta has a lateral length of >3,750 m

• Recent wells completed in the southern core of Vesta acreage are showing extensive oil, with IP30 rates of over 600 bbl/d

Westerdale North

Westerdale South

Westerdale North

Westerdale South

IP30 (bbl/d) 488 623 BT-NPV@10% ($MM) $4.7 $8.2


GOR (scf/bbl) 700 - 1,370 860 - 2,075

Capital ($MM) $6.6 $6.6 C* ($MM) 13.5 14.8




$40/bbl

+20%

502 bbl/d

1,375

$1.10

$70/bbl

-20%

747 bbl/d

2,075

$2.10

0 25 50 75 100 125 150 175 200

WTI Oil Price ($/bbl)

Capital ($MM)

IP (30-day, bbl/d)

GOR (scf/bbl)

Gas Price ($/GJ)

$55/bbl

623 bbl/d

1,717 scf/bbl

$1.68/GJ

$6.7MM

Rate of Return Sensitivity on Base Type Curve: BT-NPV10 = $8.2MM; IRR = 87%

Change in IRR from base value of 87%





Emerging Area Overview Map


Emerging Area Activity & Recent Well Results

Recent Well Results Confirm the Presence of the Light Oil Window on the West Side of the Rimbey – Leduc Reef Complex

Baytex 103/14-36-046-02W5On: 2018/03/232,478 m LL

Initial Oil IP30: 359 bbl/d

Crescent Point 16-27-048-02W5On: 2018/04/262,928 m LL

Oil IP30: 224 bbl/d

South Key WellParamount 05-29-039-04W5/02

On: 2018/07/232,545 m LL


Paramount 102/13-05-039-05W2On: 2016/12/142,027 m LL & 4,611 t Proppant

Oil IP30: 373 bbl/d (choked back)

Over-pressured, high oil deliverability


Journey / Kiwetinohk102/16-15-042-03W5/02

3,627 m LL Cased: 2018/10/232 Licensed Wells

Paramount 103/16-13-039-05W5/02On: 2014/08/062,299 m LL & 3,364 t Proppant

Oil IP30: 512 bbl/d

North Key WellsBaytex light oil discovery, 2 wells Initial Oil IP30: 750 boe/d (88% oil & NGLs)

Paramount 03-28-039-05W5 API 42O

On: 2015/10/082,236 m LL & 2,449 t Proppant

Oil IP30: 240 bbl/d (half frac’d)

Repsol Ferrier ultra-rich gas playLiquids API >500

Repsol 02-30-040-04W5 Gas Well Liquids API 400 – 450

Baytex light oil, 2 wells Initial Oil IP30: 400 bbl/d

Teine early development100/01-29-051-07W5 & 100/02-09-049-06W5 Spud June 2018103/02-07-050-06W5 Spud Jan 20192 Licensed Wells

Baytex 100/12-33-045-02W5On: 2018/09/19 2,858 m LL


100/13-16-046-02W5/02 On: 2018/09/16 2,547 m LL


2018 Activity

Paramount 103/16-13-039-05W5/02 API 42O

Type Curves

0

5

10

15

20

25

30

0 6 12 18 24 30 36 42

Cal

Day

Oil

Rat

e pe

r 100

m L

L (b

bl/d

)

Month

Emerging South WSB

Emerging North WSB


Emerging North Emerging South

Emerging North

Emerging South

IP30 (bbl/d) 398 527 BT-NPV@10% ($MM) $3.2 $6.9


GOR (scf/bbl) 2,100 - 2,430 2,715 - 3,780

Capital ($MM) $6.8 $7.0 C* ($MM) 14.5 19.5





Emerging Area – Type Curve & Economics

A Promising Area For Development With IRRs Ranging From 32% to 66%


Commentary

• The emerging area is the most active land sale area in the East Shale Basin with recent well results further spurring on additional interest

• Well licensing activity over the last year primarily targeted the oil window

• Land within the mapping area is mostly held, with August Crown land sales picking up the remaining acreage offsetting Crescent Point and Baytex’sland positions

• Preliminary results in the emerging area are very encouraging, and activity is expected to increase

$40/bbl

+20%

423 bbl/d

2,810

$1.10

$70/bbl

-20%

632 bbl/d

4,220

$2.10

0 25 50 75 100 125 150

WTI Oil Price (US$/bbl)

Capital ($MM)

IP (30-day, bbl/d)

GOR (scf/bbl)

Gas Price ($/GJ)

$55/bbl

527 bbl/d

3,515 scf/bbl

$1.68/GJ

$7.0MM

Rate of Return Sensitivity on Base Type Curve: BT-NPV10 = $6.9MM; IRR = 66%

Change in IRR from base value of 66.2%





0

5,000

2016 2017 2018 2019 2020 2021 2022 2023

Cdn Refineries Rail MainlineTrans Mntn Express KeystoneLine 3 Exp. TMX KXLCdn Prod

050

100150200250300350400

2013 2014 2015 2016 2017 2018

Mbb

l/d

-30.00

-20.00

-10.00

0.00

2013 2015 2017 2019 2021 2023

$US/

bbl

EDM-WTI Strip

Edmonton Oil Price Differential to WTI(1)

Canadian Crude Oil Supply and Egress(2)

Canadian Crude Oil Exports by Rail(3)

The pipeline gap is growing

curr

ent

Mbb

l/d

Canadian Crude Oil Pipeline Access

Alberta Duvernay Crude Oil Pipeline Access


Egress is easing…

Legislated Production Limits are Easing the Differentials and Improving Economics

Commentary

• Crude oil stocks are at all time lows, primarily due to price differentials and backwardation as owners cannot afford to store crude with future prices lower than current prices

• The WCSB produced 3.99 MMbbl/d of oil in 2017 and has continued to grow to 4.3 MMbbl/d in 2018

• Takeaway name plate pipeline capacity from the WCSB as of Sept 2018 was 3.95 MMbbl/d(3), although actual throughput is often less

• Until the lack of pipeline capacity is remediated, transportation is quickly being taken up by rail

• Canadian rail is capable of transporting up to 900 Mbbl/d but requires significant investment which is being funded by the Alberta Government and industry

• Canadian rail loading facilities have an estimated capacity of 1.2 MMbbl/d. However, maximum transportation capacity is much lower at 400-500 Mbbl/d and will require significant investment from the rail companies to be achieved

Source: geoSCOUT, GeoEDGES, BMO Capital Markets(1) Sproule Commodity Price Outlook, Bloomberg Strip Pricing March 11th, 2019(2) 2018 Crude Oil Forecast: Markets and Transportation, Canadian Association of Petroleum Producers, BMO Capital Markets, Statistics Canada(3) NEB: Canadian Crude Exports by Rail-Monthly Data. November 2018; Western Canadian Crude Oils Supply, Markets & Pipeline Capacity, December 2018

Strip Edm diff for 2019 ~US$8-9/bbl

Cushing

Edmonton

Record breaking volumes for 8 consecutive months

Edmonton

Calgary

Lloydminster

Lethbridge

Medicine Hat

expa

nsio

ns


It’s Time To Get The Word Out! Duvernay Rocks!

All the Key Elements of a Highly Profitable World-Class Resource Play are Right Here

Green-Field Oil Reservoir With Material Production Information

Being Made Public Over The Next Year

Repeatable Well Results Across Multiple Embayments

High TOC Content In A Carbonate-Rich Shale With Abundant Natural

Fractures

Most Prolific And Economic Oil Shale Play In Canada

Shallow, Thick, Over-Pressured Light Sweet Oil Reservoir With Multiple

Platforms To Develop

Easy year-round access, close to key transportation and egress

infrastructure

Photos used with permission from Vesta Energy

19

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Wendy Smith Low, Managing [email protected]

Cheryl Sandercock, P.Eng., Managing [email protected]

Engineering

Morad Rizkalla, P.Eng.,[email protected]

Steve Kehoe, M.E.Sc, P.Eng.,[email protected]

Jennifer Haskey, P.Eng.,Vice [email protected]

Jeffrey Chan, P.Eng.,[email protected]

Jason Beekhuizen, M.B.A., P.Eng.,[email protected]

Geology

Joyce Kennedy, P.Geol.,Managing [email protected]

Kathleen Dixon, M.B.A., P.Geol.,Vice [email protected]

Ryan Axani, P.Geol.,[email protected]

Commercial

Cliff Johnson, [email protected]

Maureen Jarvis, CET.,[email protected]

Mandy Edwards, [email protected]

Nick NewtonDesktop [email protected]

Kristy Kivia,Senior Admin. [email protected]

duvernay esb drill bits final march 13€¦ · wti break even (10% return, us$/bbl) $18.5 $13.5...

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