CALGARY, ALBERTA–(Marketwired – Jan. 20, 2016) – Paramount Resources Ltd. (TSX:POU)
- Paramount’s estimated average sales volumes for December 2015 were approximately 50,000 Boe/d, including approximately 12,000 Bbl/d of condensate.
- Sales volumes to date in January 2016 have averaged approximately 50,000 Boe/d, with Liquids comprising approximately 50 percent of total volumes.
- The 2-34 and 3-33 six well Ultra-Rich Montney pads were completed in the fourth quarter. Total costs to drill, complete, equip and tie-in the wells are estimated to average approximately $8.5 million per well.
- Aggregate test rates for the six well pads are:
- 2-34 pad: 44.9 MMcf/d of natural gas and 16,317 Bbl/d of Liquids
- 3-33 pad: 61.4 MMcf/d of natural gas and 13,360 Bbl/d of Liquids
- Total capital spending for 2015 is anticipated to be in-line with the Company’s previous guidance of $490 million.
Fourth quarter 2015 sales volumes averaged approximately 45,000 Boe/d, including 10,000 Boe/d of condensate.
Production in the fourth quarter was impacted by a scheduled NGLs pipeline outage that required the majority of Kaybob area wells to be shut in for 10 days beginning on October 20th and by periods of downtime in the first two weeks of November as the Musreau Deep Cut Facility was brought back on-line following maintenance work performed during the October NGLs pipeline outage.
The Company’s fourth quarter production was also impacted by an unscheduled outage at the third-party operated Smoky Deep Cut Plant which shut in approximately 2,000 Boe/d of production in November and December, and delays in the commissioning of the new third-party operated compression facility at Birch in northeast BC, which delayed approximately 1,000 Boe/d of new production by one month.
Paramount’s estimated average sales volumes for December 2015 were approximately 50,000 Boe/d, with Liquids representing approximately 45 percent of total sales volumes. Liquids sales volumes increased in December as Musreau area production resumed following the NGLs pipeline and Musreau Deep Cut Facility maintenance outages. NGLs recoveries increased at the Musreau Deep Cut Facility following the completion of maintenance which enabled the plant to operate at lower temperatures.
Six Well Ultra-Rich Montney Pads
In the fourth quarter, Paramount successfully finished completion operations for two six well Ultra-Rich Montney pads at Musreau. Total costs to drill, complete, equip and tie-in the wells are estimated to have averaged approximately $8.5 million per well.
The wells were fracked with water-based fluids and higher intensity fracks of 1,200 pounds of proppant per linear foot compared to 575 pounds of proppant per linear foot for the Company’s previous oil-based completion programs. This 125 tonne per stage water-based completion approach, combined with lower current year service costs, reduced completion costs by approximately 40 percent compared to the 60 tonne per stage oil-based fracks previously used and is expected to achieve comparable or better well performance.
Aggregate test rates for the pads are as follows:
|2-34 Six Well Pad||3-33 Six Well Pad|
|Natural Gas||Liquids||Total||Natural Gas||Liquids||Total|
|Aggregate test rates||44.9||16,317||23,800||61.4||13,360||23,593|
|Average per well||7.5||2,720||3,970||10.2||2,227||3,927|
Nine of the twelve wells have been brought on production to date, with production rates from all but one well being restricted to maintain higher reservoir pressures and Liquids recovery rates. Six of these wells have greater than 25 days of production, with raw wellhead production rates averaging 2.0 MMcf/d of natural gas and 926 Bbl/d of Liquids over their initial 25 days of production.
As a result of changes in completion practices, technical improvements, increased efficiencies and reductions in industry rates, the Company has updated its expected costs to drill, complete, equip and tie-in Musreau area Montney wells. Current cost estimates for 1.0 mile lateral wells are $8.2 million, a 28 percent reduction compared to Paramount’s average well costs in 2014, and $10.2 million for 1.5 mile lateral wells.
Gas Lift Program
In the fourth quarter, installation of “gas lift” production equipment was completed on 11 wells in the Musreau area, enabling production from wells that were flowing at reduced rates or temporarily shut in to be restored. Gas lift equipment is used to optimize long-term production of higher liquids content wells by re-injecting natural gas into the vertical section of wellbores to provide artificial lift for produced volumes. The Company will have a total of 44 wells in the Kaybob and Grande Prairie areas equipped with gas lift by mid-2016.
Cost Reduction Measures
Paramount continues to implement measures to reduce its cost structure while maximizing the efficiency and effectiveness of its operations. The Company has reduced its permanent workforce by approximately 15 percent and eliminated most of the corporate consultant positions. Employee salaries have been reduced by five percent in 2016 and rates for contract work have been reduced by 10 to 15 percent. General and administrative expenses are expected to be reduced by more than 15 percent in 2016.
Labour and travel costs for the Company’s field operations are expected to be reduced by 12 to 15 percent in 2016. Procurement processes and operating activities in the field are being reviewed to identify further opportunities to improve efficiencies and reduce costs.
MIDSTREAM SALES PROCESS
Paramount is currently conducting a process for the potential sale of certain of its midstream assets in the Kaybob operating unit, including the Musreau Deep Cut Facility. There is no assurance that this process will result in a definitive sale agreement being entered into or a sale being consummated. Until such time as it is appropriate to make a public announcement, Paramount does not intend to make any further comment on the process.
Paramount is an independent, publicly traded, Canadian corporation that explores for and develops conventional petroleum and natural gas prospects, pursues longer-term non-conventional exploration and pre-development projects and holds investments in other entities. The Company’s principal properties are primarily located in Alberta and British Columbia. Paramount’s Class A Common Shares are listed on the Toronto Stock Exchange under the symbol “POU”.