CALGARY, AB–(Marketwired – April 06, 2017) – Front Range Resources Ltd. (“Front Range” or the “Company“) (TSX VENTURE: FRK) reports the results of the Resource Assessment of its Pepper, Alberta property effective as at March 31, 2017 (the “Resource Report“), as evaluated by GLJ Petroleum Consultants (“GLJ”), an independent qualified reserves evaluator, in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook.
A range of contingent and prospective resource estimates (low, best and high) were prepared by GLJ. The Resource Report best estimate gross unrisked contingent resources is 57.6 MMBoe (including 7.5 MMbbl of natural gas liquids). In addition, the Resource Report best estimate of gross unrisked prospective resources is 62.1 MMBoe (including over 8.0 MMbbl of natural gas liquids). Combined this represents a best estimate of gross unrisked recoverable resource of 119.7 MMBoe (including 15.5 MMbbl of natural gas liquids) across the Pepper block.
The Resource Report confirms the extensive potential of the Pepper play. The Company’s ongoing winter drilling program consisted of 2 horizontal Montney wells with the goal of confirming productivity in a new field. Front Range is the first company to drill horizontal wells in this field and it has captured a large resource in an area with underutilized existing infrastructure. The Company believes that the location of this resource is strategic in light of the takeaway constraints faced by many Montney operators in other areas. Upon completion of the winter drilling and testing program, the Company will have made significant progress towards completing its Proof of Concept phase at Pepper. Once the results of the first two wells are fully evaluated, the Company expects to then move into the Optimization and Development phase. In this phase, insights learned from the initial wells would be applied towards driving well costs down and well productivity higher. This would be done in parallel with the initial infrastructure build-out to support additional field development.
At Pepper, Alberta, Front Range has an operated 100% working interest in 44 sections (28,160 acres) of Montney petroleum and natural gas rights.
The Montney Formation at Pepper is represented by a 60-70 metre erosional remnant of the Lower Montney. It is comprised of a series of 10 to 25 metre thick, coarsening upward sequences of silt to sand to coquina that were deposited in a near shore environment. Near shore deposition is typically characterized by coarser grain sizes, which has a positive influence on primary reservoir porosity and permeability. This play type has been widely developed horizontally in underpressured fields such as Kaybob South and Fir. Front Range’s Pepper property represents the first time near shore deposition is being developed in an overpressured deep basin gas environment. The closest producing horizontal Montney well to the Pepper property is approximately 42 kilometres away.
Front Range is pushing horizontal Montney development into previously untested fields and has, as earlier reported, drilled the first 2 horizontal Montney exploration wells into the emerging South Montney Trend.
The Company’s West Pepper Upper Montney discovery well (100% W.I.) at 3-26-52-23 W5M (“3- 26“) had a bottomhole pressure of 43,500 kPa (6,300 psi) — which represents 20% overpressure. The 3-26 well was opened to flow after tubing was installed and proceeded to unload a full wellbore of load fluid and then flowed at a rate of 6 MMscf/d increasing to 7.5 MMscf/d at 16,500 kPa (2,400 psi) over several hours. Subject to approval of a final budget by the Board of Directors, construction to equip and tie-in the 3-26 well is expected to commence in Q2, 2017.
Drilling operations at the 6-28-52-22 W5M Hz (“6-28“) Basal Montney well (100% W.I.) at East Pepper have been completed with fracturing operations currently projected to commence in April 2017. The Basal Montney was previously tested in the 102/3-21-52-22 W5M vertical Montney well at a rate of 550 Mscf/d of natural gas with 29 barrels/MMscf of free condensate and up to an additional 30 barrels/MMscf of natural gas liquids (recoverable through shallow cut natural gas processing) at a flowing casing pressure of 293 kPa (47 psi). This test rate was obtained from a single 60-tonne frac in the vertical wellbore and represents the last 24 hours of the 141.5 hour flow test period.
The Resource Report estimated Petroleum Initially-in-Place (PIIP), both discovered and undiscovered, as well as recoverable contingent and prospective resources over the Pepper, Alberta property.
A summary of the tables from the Resource Report are included below.
|Pepper, Alberta – March 31, 2017|
|Summary of Gross Working Interest Resources – Total Montney|
|Contingent Resources(2)||Prospective Resources(3)|
|Best Estimate||Best Estimate|
|Shale Gas (Bcf)||300.8||324.3|
|Natural Gas Liquids (Mbbls)||7,456||8,045|
|Oil Equivalent (Mboe)||57,596||62,095|
|Shale Gas (Bcf)||103.2||100.1|
|Natural Gas Liquids (Mbbls)||2,557||2,484|
|Oil Equivalent (Mboe)||19,756||19,169|
(1) Petroleum Initially-in-Place (PIIP) was calculated in the Resource Report for gas volumes over the Pepper property. PIIP was divided into Discovered PIIP and Undiscovered PIIP, with Discovered PIIP being assigned to lands within two miles of a measurable hydrocarbon test.
(2) Contingent resources are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent resources have been assigned to lands within 2 miles of the successful test results. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. The estimates of contingent resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated, at a given date, and that the resources can be profitably produced in the future. Actual contingent resources (and any volumes that may be reclassified as reserves) and future production from such contingent resources may be greater than or less than the estimates provided, and variances may be material.
(3) Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources. The estimates of prospective resources involve implied assessment, based on certain estimates and assumptions, that the resources described exists in the quantities predicted or estimated, at a given date, and that the resources can be profitably produced in the future. Actual prospective resources and future production from such prospective resources may be greater than or less than the estimates provided, and variances may be material.
(4) The contingent and prospective resources have been risked for the chance of commerciality. The chance of commerciality (CoC) is defined as: CoC = chance of development x chance of discovery, where the chance of discovery for contingent resources is equal to 1.0. The summary of the contingent resource risking factor for the Pepper property is as follows:
|Development Plan Factor||0.70|
|Other Contingency Factor||1.00|
|Chance of Commerciality||0.34|
(5) Column total does not add exactly due to rounding.
The Resource Report was subject to considerable uncertainty due to the scarcity of high quality log data, mostly due to bad hole in the majority of the offsets that were drilled to deeper targets, and a lack of core data in general, with no core analysis available in the silty, tight looking Montney sediments in the area.
The Company cautions that the economic case for the development of the contingent and prospective resources presented herein will be dependent upon favourable results of additional testing and/or drilling in the project area. The early stage of the project necessitates the consideration of risk factors with respect to the Resource Report. Additional well and/or well test data may positively or negatively impact these risk factors.
The contingent resources have been risked for the chance of commerciality, or commercial development, defined as the probability of the chance of discovery and the chance of development. For contingent resources, the chance of discovery is equal to one. The chance of development is the estimated probability that once discovered, a known accumulation will be commercially developed, and has been estimated at 0.34 for the contingent resources. The contingent resources have established technology status.
Contingent resources can be sub-classified based on their project maturity sub-class which help identify a project’s change of commerciality. All of the contingent resources identified in the Resource Report have been classified as “development unclarified”, which is defined as contingent resources when the evaluation is incomplete and there is ongoing activity to resolve any risks or uncertainties. The contingent resources are located in a region of little Montney development. For contingent resources to be converted into reserves, management needs to confirm productivity for development not immediately offsetting existing wells/tests, and then develop firm plans including timing, infrastructure and the commitment of capital. Confirmation of commercial productivity is generally required before the Company can prepare firm development plans and commit the required capital for the development of the contingent resources. Additional contingencies are related to the current lack of in-field infrastructure required to develop the resources in a relatively quick time frame.
In addition, a portion of the resources have been classified as prospective resources. This accounts for areas of the Pepper property that is not within range of commercially tested wells. In addition to the development risk of 0.34, the prospective resources are further risked for chance of discovery using a factor of 0.90, resulting in a chance of commerciality of 0.31.