CALGARY, Alberta, Nov. 01, 2017 (GLOBE NEWSWIRE) — (TSX-V:BBI) Blackbird Energy Inc. (“Blackbird” or the “Company”) is pleased to provide an operational update including reaching a new production milestone; securing long term processing through a gas handling agreement; an update on drilling and completion activity and the expansion of the Company’s Montney rights to 132 (112.4 net) sections in the Pipestone/Elmworth corridor.
- Record Corporate Production: For the period of October 1 to October 21, Blackbird produced estimated average sales volumes of approximately 1,808 boe/d (52% liquids), a new corporate production record and a 108% increase from third quarter average production of 868 boe/d (49% liquids) – production was shut-in on October 21 due to unplanned third party facility maintenance. Once production is back online, based on current processing agreements Blackbird expects that its inventory of wells will allow the Company to sustain consistent production of approximately 1,600 to 2,000 boe/d and evaluate the productivity of both the Upper and Middle Montney to further establish type curves and plan for future development.
- Gas Processing Agreement Sets the Stage for Future Growth: Blackbird is pleased to announce that it has executed an agreement with Tidewater Midstream and Infrastructure Ltd. (“Tidewater”) for firm processing of raw gas from the Company’s condensate rich Pipestone/Elmworth Montney play in the greater Grande Prairie area of Alberta. The companies have agreed to an initial term of five years with firm capacity of 20 mmcf/d expected to commence in second quarter of 2019, increasing to 25 mmcf/d 12 months after plant start-up and to 30 mmcf/d 18 months after plant start-up.
- Substantial Delineation Activity: Blackbird is continuing to advance its condensate rich Pipestone/Elmworth Montney asset from delineation to development and currently has 16 (11.4 net) horizontal wells within the Pipestone/Elmworth corridor including 7 (7.0 net) producing wells, one (1.0 net) well currently being recompleted, one (1.0 net) well drilled and awaiting completion, one (1.0 net) well currently drilling and six (1.4 net) non-operated wells. Blackbird continues to delineate and define the multilayer potential across its asset base. Of the Company’s 16 wells, 8 (7.2 net) are in the Upper Montney and 8 (4.2 net) are in the Middle Montney.
- Continued Expansion of Blackbird Acreage: Blackbird has acquired an additional 7 (3.5 net) sections of Montney rights bringing total land holdings to 132 (112.4 net) sections in the Pipestone/Elmworth corridor.
Long Term Gas Processing Agreements
Over the past 18 months Blackbird has been evaluating multiple gas handling arrangements with several operators in the Grande Prairie region. After extensive analysis and negotiation, the Company has identified Tidewater Midstream and Infrastructure Ltd. as the preferred midstream operator for Blackbird to achieve its long term gas handling requirements. Blackbird continues to evaluate further gas handling options to facilitate future production growth both west and south of Grande Prairie.
Blackbird is pleased to announce that it has executed an agreement with Tidewater for firm processing of raw gas from the Company’s condensate rich Pipestone/Elmworth Montney play in the greater Grande Prairie area of Alberta. The companies have agreed to an initial term of five years with firm capacity of 20 mmcf/d expected to commence in the second quarter of 2019, increasing to 25 mmcf/d 12 months after plant start-up and to 30 mmcf/d 18 months after plant start-up. Blackbird will have an option to acquire a working interest of up to 20% in Tidewater’s proposed deep cut sour gas processing facility located near Wembley, Alberta (the “Tidewater Facility”), which is expected to significantly reduce processing fees and establish Blackbird as a lower cost producer.
Tidewater is currently working toward a gas gathering system for Blackbird north of the Wapiti River. Additionally, Blackbird and Tidewater are evaluating the construction of a gathering system that would tie-in volumes from the Company’s 100% owned and operated Pipestone/Elmworth gas processing facility (the “Elmworth Facility”) to the Tidewater Facility.
The Tidewater Facility is expected to have an initial processing capacity of 100 mmcf/d, with Blackbird serving as an anchor tenant. Additionally, Tidewater is proposing a 5% sour deep cut, and will work with Blackbird to obtain premium pricing for ethane, propane and all NGLs. Tidewater is a premier operator in Western Canada, and Tidewater’s planned infrastructure in the region is very synergistic with Blackbird’s objectives. Along with providing a long term processing platform with the ability to grow, Blackbird’s agreement with Tidewater will address the Company’s needs for fuel gas, provides an option for interim sweet gas storage and marks the beginning of a long term business relationship.
“We are looking forward to working with Tidewater, who like Blackbird has a significant business footprint in the Grande Prairie region and adheres to the high standard of environmental and social ethics our stakeholders have come to expect. This agreement is foundational to the operational success of Blackbird, providing us with enhanced economic yield on both our natural gas and liquids production due to the facility’s deep cut capability. Our arrangement with Tidewater secures long term processing for our condensate rich natural gas production and will facilitate our expected production growth as we move from delineation to development, while significantly reducing our cost structure and allowing Blackbird to become a lower cost producer,” said Garth Braun, President, Chairman and CEO.
Processing South of the Wapiti River
Blackbird has been actively negotiating with several parties to extend and expand processing capacity in the region. The Company is also evaluating the construction of a gathering system that would tie-in volumes from Blackbird’s Elmworth Facility to the Tidewater Facility.
Blackbird has completed all necessary public consultation and notification requirements to allow it to submit for regulatory approval to double the capacity of its Elmworth Facility from 10 mmcf/d of natural gas and 1,500 bbls/d of associated liquids to 20 mmcf/d and 3,000 bbls/d. Additionally, the Company is continuing to move forward with the expansion of its Eastern Pipestone/Elmworth Gathering System (“Eastern Gathering System”), with construction expected to commence post regulatory approval. The Eastern Gathering System will tie-in production from the Company’s 100% owned 2-20-70-6W6 (11-9 surface) well and service future development wells on Blackbird’s eastern lands south of the Wapiti.
Blackbird is continuing to advance its condensate rich Pipestone/Elmworth Montney asset from delineation to development and currently has 16 (11.4 net) horizontal wells in the area. Activity spans across a significant extent of Blackbird’s land base and includes drilling in both the Upper and Middle Montney intervals. Blackbird has experienced inconsistent run times since the beginning of August due to third party downtime and egress restrictions affecting the greater Grande Prairie region, which has limited efficiency rates and impeded the Company’s ability to unload completion water from fracing operations and initiate initial production tests. Blackbird currently expects production to be back online in early November, at which point several wells can be brought on production and begin/continue to flow back. The Company expects to provide a detailed update including production data on new wells following an additional two to three weeks of consistent run time. See below for an update on the status of Blackbird’s current wells.
- 6-33-71-7W6 Upper Montney Delineation Well: The 6-33-71-7W6 Upper Montney well is currently being drilled, and after conducting a stratigraphic test Blackbird began drilling the horizontal component of the wellbore and completion operations are expected to commence in December. The well will be utilizing the STAGE Generation Four 8620 Sleeve System, which has been successfully utilized by third parties in numerous formations in North America. In total, the Company expects to complete 65 intervals across a 2,200 meter lateral with approximately 4,875 tonnes of sand expected to be placed representing a completion intensity of approximately 2.2 tonnes per meter. This is a significant well for Blackbird and will delineate the northern extent of Blackbird’s land while also retaining 14 sections of Montney rights.
- 2-28-70-7W6 Middle Montney Development Well: The 2-28-70-7W6 Middle Montney well was drilled to a total depth of 4,942 meters with a lateral length of 1,977 meters and has been successfully completed over 46 intervals using the STAGE Generation Four 8620 Sleeve System exclusively. Approximately 3,521 tonnes of sand was placed representing a completion intensity of approximately 1.8 tonnes per meter. Production tubing has been installed and the well is tied-in and will be brought on production when a third party facility is back online.
- 15-21-70-7W6 Upper Montney Development Well: The 15-21-70-7W6 Upper Montney well was successfully recompleted in late September utilizing Plug and Perf technology. The well was completed in 24 stages with four to five intervals per stage for a total of 108 intervals across a 1,300 meter lateral. Approximately 3,170 tonnes of sand was placed representing a completion intensity of approximately 2.4 tonnes per meter. Production tubing has been installed and the well is tied-in and will be brought on production when a third party facility is back online.
- 02/6-26-70-7W6 Upper Montney Development Well: The 02/6-26-70-7W6 Upper Montney well was drilled to a total depth of 4,808 meters with a lateral length of 2,103 meters and has now been successfully completed over 42 intervals using a combination of the STAGE Generation Four 8620 Sleeve System and Plug and Perf technology. The initial 18 intervals were completed utilizing pinpoint fracturing with the balance of the well being completed with 8 Plug and Perf stages with 3 intervals per stage. Approximately 3,193 tonnes of sand was placed representing a completion intensity of approximately 1.5 tonnes per meter. The well was brought on production in late September and was cleaning up before being shut-in.
- 1-20-70-7W6 Upper Montney Development Well: The 1-20-70-7W6 Upper Montney well was drilled to a total depth of 4,590 meters with a lateral length of 2,012 meters, and is scheduled to be completed in November using a combination of the STAGE Generation Four 8620 Sleeve System and Plug and Perf technology. The Company expects to complete 42 intervals across the 2,012 meter lateral with the initial 20 stages (including the toe port) being completed using the STAGE system and the remaining 22 stages being completed with Plug and Perf technology at one interval per stage. Approximately 4,040 tonnes of sand is expected to be placed representing a completion intensity of approximately 2.0 tonnes per meter.
- 2-20-70-6W6 Middle Montney Development Well: The 2-20-70-6W6 Middle Montney well is currently undergoing recompletion operations, and Blackbird plans to re-create a pinpoint completion on this well utilizing Plug and Perf technology. The completion is expected to consist of 36 stages with one interval per stage across a 2,256 meter lateral. Approximately 4,000 tonnes of sand is expected to be placed representing a completion intensity of approximately 2.0 tonnes per meter. As previously disclosed, management estimated that less than 20% of the well was completed during initial fracing operations, and the 2-20-70-6W6 well produced approximately 395 bbls/d of light oil and 243 mcf/d gas during the last 24 hours of a 111-hour production test. Following successful recompletion the well will be re-tested, and management expects the result will further confirm the presence of the “Volatile Oil” window on Blackbirds eastern lands. The Company cautions that test results and initial production rates are not necessarily indicative of long-term well or reservoir performance or ultimate recovery. Actual results will differ from those realized during testing or an initial short-term production period, and the difference may be material.
- 02/2-20-70-7W6 Upper Montney Development Well: As previously disclosed, Blackbird recompleted the 02/2-20-70-7W6 Upper Montney well in mid-June utilizing Plug and Perf technology. Upon commencement of the recompletion, Blackbird encountered an obstruction half way down the lateral and as a result was able to complete only approximately 50% of the lateral length of the wellbore. Due to mechanical challenges the recompletion consisted of three stages with the first being three intervals and the following two stages being 15 intervals per stage for a total of 33 intervals. Approximately 1,650 tonnes of sand was placed representing a completion intensity of approximately 1.6 tonnes per meter. This compares to the best results in the area to date which have been completed utilizing very high intensity pinpoint completions including proppant of up to approximately 2.0 tonnes per meter. Blackbird believes that completing wells with a larger number of intervals per stage may not distribute proppant homogeneously throughout the formation. For this reason, along with the fact that only approximately 50% of the wellbore could be recompleted, management believes that results from this well may not be reflective of the ultimate potential of the reservoir. The well was brought on production in September and was cleaning up before being shut-in.
In addition to the wells described above, Blackbird has had the opportunity to participate in six (1.4 net) horizontal wells with industry partners, which has allowed for significant delineation, land retention and the gathering of valuable geological information. The Company has been pleased with joint operations, and all wells have now been successfully drilled and completed. Production data is not publicly available at this time, however management is encouraged with preliminary test results. Blackbird is working closely with its industry partners to arrange gathering and processing for these wells so they can be brought on production. Figure 1 provides a summary of Blackbird’s non-operated wells.
Industry activity in the Pipestone/Elmworth corridor continues to be strong, and since January 1, 2017 over 100 wells have now been spud or rig released in the Montney surrounding Blackbird, as illustrated with the red wells highlighted in Figure 2. Regional activity continues to provide valuable insight into production profiles and liquids content for Upper and Middle Montney wells throughout the land base, and will help Blackbird with the development of type curves and the ability to plan for future development.
Blackbird Energy Inc. is a highly innovative oil and gas exploration and development company focused on the condensate and liquids-rich Montney fairway at Elmworth, near Grande Prairie, Alberta.