CALGARY, Alberta, March 13, 2018 (GLOBE NEWSWIRE) — Blackbird Energy Inc. (TSX-V:BBI) (“Blackbird” or the “Company”) is pleased to announce test results from its 3-27-71-7W6 Upper Montney Delineation well, expansion of the Company’s credit facility to $20 million, estimated monthly sales volumes and productive capacity, preliminary plans for a development program north of the Wapiti River, and results from the Company’s 2018 Annual and Special Meeting of Shareholders (the “AGM”).
“The successful testing of our 3-27-71-7W6 Upper Montney Delineation well, including pressures and natural gas rates that exceeded management expectations, further supporting our geologic model that over 114 sections (72,960 acres) of our lands are situated in the over-pressured liquids rich Montney corridor at Pipestone/Elmworth. With the multi-interval potential of our land now largely de-risked, and the initial capital liquidity provided by an expanded $20 million credit facility, Blackbird is positioned to move ahead with its development program north of the Wapiti River. We have an expanding relationship with our lender, ATB Financial, and on behalf of Blackbird and our shareholders, I would like to thank ATB for their continued support.” said Garth Braun, President, CEO and Chairman of Blackbird.
- Upper Montney Delineation Test: Blackbird’s 3-27-71-7W6 Upper Montney Delineation well flowed at an average estimated sales rate of 1,188 boe/d (53% liquids, liquids/gas ratio of 190 bbls/mmcf) over the final 48 hours of an 12-day production test. Flowing casing pressures increased steadily over the final test period to 7,289 kPa as choke sizes were reduced to limit natural gas production and stay within regulatory flaring restrictions. Management is very encouraged by this short-term test result and anticipates that liquid and natural gas rates could improve with greater frac water load recovery from longer production times and the installation of production tubing.
- Expanded Credit Facility: Blackbird and its lender, ATB Financial, have agreed to increase the Company’s revolving operating loan facility from $1.0 million to $20.0 million.
- February Sales Production: Blackbird’s total corporate February sales production averaged an estimated 2,252 boe/d (59% liquids) for the 15 days the Company was able to produce during the month.
- Estimated Productive Capacity: Subject to the tie-in of the 3-27-71-7W6 Upper Montney and 2-20-70-6W6 Middle Montney Delineation wells, management estimates Blackbird’s current unrestricted flowing productive capacity from its 10 (10.0) operated wells to be approximately 6,000 boe/d.
- Preliminary Northern Development Program: Blackbird expects to be able to meet its initial 20 mmcf/d commitment at the proposed Tidewater Midstream & Infrastructure Ltd. deep cut sour gas processing facility located near Wembley, Alberta (the “Tidewater Facility”) through the drilling, completion and tie-in of five (5.0 net) additional wells north of the Wapiti River.
Upper Montney Delineation Test
Blackbird is pleased to provide test results from its 3-27-71-7W6 Upper Montney Delineation well, which is the Company’s first operated delineation well north of the Wapiti River and is approximately 14 kilometers north of Blackbird’s previous operated development drilling. Production test results are outlined below:
|Well||Final 48 Hour Rate of 12 Day Production Test(1)(2)(3)(4)|
|Condensate (bbl/d)||Natural Gas (mcf/d)||NGLs (bbl/d)||LGR(5) (bbls/mmcf)||Total (boe/d)||Lateral Length (meters)|
|3-27-71-7W6 (Upper Montney)||300||3,337||334||190||1,188||2,200|
|1) Numbers may not add due to rounding.|
|2) All disclosed production rates and volumes are presented net of any load fluid recovery. By the end of the 12-day production test period the well had recovered approximately 12% of load frac water.|
|3) All volumes are based on estimated sales production data per expected deep cut recoveries through future processing at the proposed Tidewater Facility.|
|4) The final 48 hour rate does not include a period at the end of the test where the well was highly constrained while the Company was in the process of applying for an expanded flare permit, which was not granted.
|5) Liquids/gas ratio (LGR) includes condensate and NGL production.|
The Company cautions that short-term test rates are not necessarily indicative of long-term well or reservoir performance or of ultimate recovery. See “Short Term Test Rates” below.
The 3-27-71-7W6 Upper Montney Delineation well was drilled to a total depth of 4,604 meters with a lateral of 2,200 meters and completed over 59 intervals using the STAGE System exclusively. Approximately 4,500 tonnes of sand was placed representing a completion intensity of approximately 2.0 tonnes per meter. Over the final 48 hours of production testing the well flowed at an average estimated sales rate of 1,188 boe/d (53% liquids, LGR of 190 bbls/mmcf) based on expected deep cut recoveries through future processing at the proposed Tidewater Facility. At the end of the test period the well had only recovered approximately 12% of load frac water. Based on previous results, management expects to see increasing condensate and liquids yields as the well cleans up to approximately 30-40% load frac water recovery. Flowing casing pressures increased steadily over the final test period to 7,289 kPa as choke sizes were reduced to limit natural gas production and stay within regulatory flaring restrictions. Management is very encouraged by this short-term test result and anticipates that liquid and natural gas rates could improve with longer production times and the installation of production tubing. The well will remain shut in until the proposed Tidewater Facility is operational, which is currently expected to occur in the second quarter of 2019.
Credit Facility Expanded to $20 Million
Blackbird and its lender, ATB Financial, have agreed to increase the Company’s revolving operating loan facility from $1.0 million to $20.0 million. The terms of the facility are otherwise unchanged. Blackbird may, at its option, elect to submit an updated engineering report in advance of its required annual review for the purposes of a borrowing base redetermination. Blackbird currently has no debt, and with the expanded credit facility has over $20 million of working capital funding available. The Company expects to continue its conservative approach to debt, and is currently evaluating non-dilutive options for additional capital liquidity to complement its increased credit facility and prepare for future development.
February Sales Production of Approximately 2,252 boe/d (59% liquids)
Blackbird is pleased to announce that its total corporate February sales production averaged an estimated 2,252 boe/d (59% liquids) for the 15 days the Company was able to produce during the month. Estimated sales production averaged 1,173 boe/d on a calendar day basis through February, with volumes being impacted by approximately 13 days of unscheduled third party downtime. The Company anticipates a similar level of third party downtime impact in March, with a return to consistent operations thereafter. The February volumes do not include approximately 5,285 barrels of condensate produced during production testing of the Company’s 2-20-70-6W6 Middle Montney Delineation well.
Estimated Behind Pipe Volumes
Subject to the tie-in of the 3-27-71-7W6 Upper Montney well to the Tidewater Facility (which is anticipated for the second quarter of 2019) and the 2-20-70-6W6 Middle Montney Delineation well to the Company’s 100% owned and operated Pipestone/Elmworth gas processing facility (which is anticipated for Fall 2018), management estimates Blackbird’s current unrestricted flowing productive capacity from its 10 (10.0) operated wells to be approximately 6,000 boe/d based on the Company’s own production test data. The Company cautions, however, that future production and reservoir performance cannot be predicted with certainty and may be less than estimated, and may also be subject to factors that restrict production to a level below an unrestricted flowing productive capacity. Blackbird is currently subject to a take-or-pay gas handling agreement for firm transportation and processing of sour natural gas that limits the Company to approximately 6.0 mmcf/d of natural gas and associated liquids. This estimate of productive capacity does not include production from the Company’s working interest in 6 (1.4 net) non-operated wells.
Preliminary Northern Development Program
Based on the successful testing of the Company’s 3-27-71-7W6 Upper Montney Delineation well, which exhibited natural gas rates and casing pressures that exceeded management expectations, Blackbird now anticipates being able to meet its initial 20 mmcf/d delivery commitment to the proposed Tidewater Facility through the drilling, completion and tie-in of five (5.0 net) additional wells north of the Wapiti River. This compares to previous internal estimates for up to 10 (10.0 net) wells required to meet initial processing commitments.
The Company has made significant progress toward securing a compressor site and obtaining authorization to commence surveying right of ways for future pipelines. Blackbird has successfully acquired 4 pad sites for near-term development, and has identified, mapped and surveyed an additional 6 pad sites as a part of its ongoing development planning. The Company currently expects to commence its single-rig drilling program north of the Wapiti River in the summer of 2018.
Results of the 2018 AGM
Blackbird is pleased to announce that all items of business considered at the AGM held on March 7, 2018 were approved by shareholders, including: the election of Garth Braun, Kevin Andrus, Sean Campbell, William Macdonald, Ron Schmitz and Burton Ahrens as directors of the Company until the next AGM; the re-appointment of Davidson & Company LLP as the auditors of the Company; and the annual confirmation of the Company’s incentive stock option plan. To view an archived recording the 2018 AGM please refer to the Blackbird website.
Blackbird Energy Inc. is a highly innovative oil and gas exploration and development company focused on the condensate and liquids-rich Montney fairway at Pipestone/Elmworth, near Grande Prairie, Alberta.
For more information, please view our Corporate Presentation at www.blackbirdenergyinc.com or contact:
Blackbird Energy Inc.
Chairman, CEO, and President
Manager, Business Development
(403) 699-9929 Ext. 103
This news release contains certain statements (“forward-looking statements”) that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future results or events, are based upon internal plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those indicated or suggested therein. All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are typically, but not always, identified by words such as “anticipate”, “continue”, “estimate”, “expect”, “intend”, “may”, “will”, “should”, “believe”, “plan”, “objective”, “potential” and similar or other expressions indicating or suggesting future results or events.
Forward-looking statements are not promises of future outcomes. There can be no assurance that the results or events indicated or suggested by the forward-looking statements, or the plans, intentions, expectations or beliefs contained therein or upon which they are based, are correct or will in fact occur or be realized (or if they do, what benefits the Company may derive therefrom).
In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to: the multi-interval potential of Blackbird’s lands; the Company’s planned development program north of the Wapiti River and timing for commencement of related drilling activities; potential improvement of production rates from the 3-27-71-7W6 Upper Montney Delineation well with longer production times and the installation of production tubing; expected deep cut recoveries through future processing at the proposed Tidewater Facility; the internally estimated unrestricted flowing productive capacity of approximately 6,000 boe/d from the Company’s 10 (10.0 net) operated wells now tied-in or tested (subject to tie-in of the 3-27-71-7W6 Upper Montney Delineation and 2-20-70-6W6 Middle Montney Delineation wells); anticipated timing for tie-in of the 3-27-71-7W6 Upper Montney Delineation and 2-20-70-6W6 Middle Montney Delineation wells; anticipated timing for the Tidewater Facility becoming operational; continuation of the Company’s conservative approach to debt levels; prospective options for additional capital liquidity; anticipated third party downtime in March and subsequent return to consistent operations; internal estimates as to the number of wells needed to meet the Company’s initial 20 mmcf/d commitment to the proposed Tidewater Facility; and anticipated timing for commencement of Blackbird’s northern development program.
With respect to the forward-looking statements contained in this news release, Blackbird has assessed material factors and made assumptions regarding, among other things: future commodity prices and currency exchange rates, including consistency of future oil, NGLs and natural gas prices with current commodity price forecasts; the Company’s continued ability to obtain qualified staff and equipment in a timely and cost-efficient manner; infrastructure and facility design concepts that have been applied by the Company elsewhere in its Pipestone / Elmworth Project may be successfully applied to the properties; the predictability of future results based on past and current experience; the predictability and consistency of the legislative and regulatory regime governing royalties, taxes, environmental matters and oil and gas operations, both provincially and federally; the Company’s ability to market production of oil, NGLs and natural gas successfully to customers; the timing and success of drilling and completion activities (and the extent to which the results thereof meet expectations); the Company’s future production levels and amount of future capital investment, and their consistency with the Company’s current development plans and budget; future capital expenditure requirements and the sufficiency thereof to achieve the Company’s objectives; the successful application of drilling and completion technology and processes; the applicability of new technologies for recovery and production of the Company’s reserves and other resources, and their ability to improve capital and operational efficiencies in the future; the recoverability of the Company’s reserves and other resources; the Company’s ability to economically produce oil and gas from its properties and the timing and cost to do so; the performance of both new and existing wells; future cash flows from production; future sources of funding for the Company’s capital program; the Company’s future debt levels; geological and engineering estimates in respect of the Company’s reserves and other resources; the accuracy of geological and geophysical data and the interpretation thereof; the geography of the areas in which the Company conducts exploration and development activities; the timely receipt of required regulatory approvals;; the access, economic, regulatory and physical limitations to which the Company may be subject from time to time; the impact of competition on the Company; and the Company’s ability to obtain external financing when required and on acceptable terms.
The forward-looking statements contained herein reflect management’s current views, but the assessments and assumptions upon which they are based may prove to be incorrect. Although Blackbird believes that its underlying assessments and assumptions are reasonable based on currently available information, undue reliance should not be placed on forward-looking statements, which are inherently uncertain, depend upon the accuracy of such assessments and assumptions, and are subject to known and unknown risks, uncertainties and other factors, both general and specific, many of which are beyond the Company’s control, that that may cause actual results or events to differ materially from those indicated or suggested in the forward-looking information and statements. Such risks, uncertainties and other factors are discussed in the Company’s current annual information form , annual and interim management’s discussion and analysis, and other documents filed by it from time to time with securities regulatory authorities in Canada, copies of which are available electronically on SEDAR at www.sedar.com, and include, but are not limited to: volatility in market prices and demand for oil, NGLs and natural gas and hedging activities related thereto; general economic, business and industry conditions; variance of the Company’s actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms; risks related to the exploration, development and production of oil and natural gas reserves and resources; negative public perception of oil and natural gas development and transportation, hydraulic fracturing and fossil fuels; actions by governmental authorities, including changes in government regulation, royalties and taxation; potential legislative and regulatory changes; the rescission, or amendment to the conditions of, groundwater licenses of the Company; management of the Company’s growth; the ability to successfully identify and make attractive acquisitions, joint ventures or investments, or successfully integrate future acquisitions or businesses; the availability, cost or shortage of rigs, equipment, raw materials, supplies or qualified personnel; adoption or modification of climate change legislation by governments; the absence or loss of key employees; uncertainty associated with estimates of oil, NGLs and natural gas reserves and resources and the variance of such estimates from actual future production; dependence upon compressors, gathering lines, pipelines and other facilities, certain of which the Company does not control; the ability to satisfy obligations under the Company’s firm commitment transportation arrangements; the uncertainties related to the Company’s identified drilling locations; the high-risk nature of successfully stimulating well productivity and drilling for and producing oil, NGLs and natural gas; operating hazards and uninsured risks; the possibility that the Company’s drilling activities may encounter sour gas; execution risks associated with the Company’s business plan; failure to acquire or develop replacement reserves; the concentration of the Company’s assets in the Pipestone / Elmworth Project area; unforeseen title defects; aboriginal claims; failure to accurately estimate abandonment and reclamation costs; development and exploratory drilling efforts and well operations may not be profitable or achieve the targeted return; horizontal drilling and completion technique risks and failure of drilling results to meet expectations for reserves or production; limited intellectual property protection for operating practices and dependence on employees and contractors; third-party claims regarding the Company’s right to use technology and equipment; expiry of certain leases for the undeveloped leasehold acreage in the near future; failure to realize the anticipated benefits of acquisitions or dispositions; failure of properties currently held or acquired in the future to produce as projected and inability to accurately determine reserve and resource potential, identify liabilities associated with acquired properties or obtain protection from sellers against such liabilities; changes in the application, interpretation and enforcement of applicable laws and regulations; restrictions on drilling intended to protect certain species of wildlife; potential conflicts of interests; actual results differing materially from management estimates and assumptions; seasonality of the Company’s activities and the Canadian oil and gas industry; alternatives to and changing demand for petroleum products; extensive competition in the Company’s industry; lower oil, NGLs and natural gas prices and higher costs; failure of 2D and 3D seismic data used by the Company to accurately identify the presence of oil and natural gas; risks relating to commodity price hedging instruments; terrorist attacks or armed conflict; cyber security risks, loss of information and computer systems; inability to dispose of non-strategic assets on attractive terms; security deposits required under provincial liability management programs; reassessment by taxing authorities of the Company’s prior transactions and filings; variations in foreign exchange rates and interest rates; third-party credit risk including risk associated with counterparties in risk management activities related to commodity prices and foreign exchange rates; sufficiency of insurance policies; potential litigation; variation in future calculations of non-IFRS measures; sufficiency of internal controls; breach of agreements by counterparties and potential enforceability issues in contracts; impact of expansion into new activities on risk exposure; inability of the Company to respond quickly to competitive pressures; and the risks related to the common shares and warrants that are publicly traded. This list is not exhaustive.
The forward-looking statements contained in this news release are made as of the date hereof and Blackbird assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. All forward-looking statements herein are expressly qualified by this advisory.
Short Term Test Rates
The Company cautions that short-term test rates are not necessarily indicative of long-term well or reservoir performance or of ultimate recovery. Such rates are preliminary in nature and may not be representative of stabilized on-stream production rates. Actual results will differ from those realized during a short term measurement period, and the difference may be material. Production over a longer period will also experience natural decline rates, which can be high in the Montney play. Short-term test rates cannot be relied upon as providing assurance of longer term production.
Oil and Gas Measures
This news release discloses certain production information on a barrels of oil equivalent (“boe”) basis with natural gas converted to barrels of oil equivalent using a conversion factor of six thousand cubic feet of gas to one barrel of oil (6:1). Condensate and other NGLs are converted to boes at a ratio of 1 bbl:1 bbl. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based roughly on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the Company’s sales point. Although the 6:1 conversion ratio is an industry accepted norm, it is not reflective of price or market value differentials between product types. Based on current commodity prices, the value ratio between crude oil and natural gas is significantly different from the 6:1 energy equivalency ratio. Accordingly, using a conversion ratio of 6 mcf:1 bbl may be misleading as an indication of value.
THE TSX VENTURE EXCHANGE INC. HAS NEITHER APPROVED NOR DISAPPROVED THE CONTENTS OF THIS PRESS RELEASE. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.