Hammerhead Resources Inc. is the newest public company in the Alberta Montney, with shares first trading on the TSX on February 27, 2023 under the symbol TSX:HHRS.TO. This comes after the combination of Hammerhead Resources with Decarbonization Plus Acquisition Corporation IV, a Special Purpose Acquisition Company (SPAC) largely funded by New York-based private equity firm Riverstone Holdings LLC. This SPAC was focused on decarbonization initiatives, and the $1.3 billion CAD deal stipulates that the combined entity is net zero on Scope 1 and Scope 2 by 2030 and that 20% of management compensation is tied to ESG performance. Prior to the announcement of the business combination, Hammerhead also increased its borrowing base by $50 million with the addition of RBC to its loan syndicate. The combined entity is led by President and CEO Scott Sobie, who occupied the same role prior to the combination.
Figure 1 – Hammerhead Resources wells with nearby mineral rights by company (note: not all companies land positions shown)
Having operated privately in the Canadian oil patch for a number of years, the company’s existing wells and mineral rights are concentrated southeast of Grande Prairie in the Karr and Gold Creek area. Hammerhead’s current 107,000 acre position sees the company neighbouring Montney producers including Spartan Delta Corp., Pipestone Energy, Whitecap Resources, ARC Resources and Paramount Resources, among others. Peak rate production in January 2023 exceeded 41,000 BOE/d with a commodity composition of 38% oil, 11% NGLs and 51% natural gas. The most recent full quarter data is from Q3 2022, when production averaged 32,111 BOE/d with 29% oil, 13% NGLs and 58% natural gas. Hammerhead Resources’ operating, transportation, and G&A costs on a per BOE level all decreased between Q3 2021 and Q3 2022, coinciding with significant increases in overall production.
The charts below are all sourced from BOE Intel.
Figure 2 – Hammerhead Resources G&A costs for available quarters
Figure 3 – Hammerhead Resources transportation costs for available quarters
Figure 4 – Hammerhead Resources operating costs for available quarters
The winter drilling program for Hammerhead has been very successful, as it has brought on some very prolific wells. In the month of January, Hammerhead had 8 of the top 15 oil/condensate wells in the Alberta Montney. Those 8 wells all came from the same pad and had daily average production rates ranging from 695 – 1,317 bbl/d of oil, plus associated gas. To see those 8 Hammerhead wells, and all of those top 15 Alberta Montney oil/condensate wells on Petro Ninja, click here. The full table is also below.
TOP 15 ALBERTA MONTNEY OIL/CONDENSATE WELLS – JANUARY VOLUMES
|Licensee||UWI||Field Name||Formation||Monthly Liquids Production (bbl)||Daily Average Liquids (bbl/d)||Daily Average Gas (mcf/d)||On Prod Date||Monthly Prod Hours||Cumulative Liquids (bbl)|
|Hammerhead Resources Inc.||103051006604W600||Karr||Montney Fm||39,496.0||1,317.0||5,030.0||2022-11-27||45,807.0|
|Hammerhead Resources Inc.||102121006604W600||Karr||Montney Fm||34,230.0||1,141.0||4,134.0||2022-11-29||39,126.0|
|Hammerhead Resources Inc.||100131006604W600||Karr||Montney Fm||33,317.0||1,111.0||4,492.0||2022-11-22||63,359.0|
|Hammerhead Resources Inc.||100051006604W600||Karr||Montney Fm||30,254.0||1,008.0||4,771.0||2022-11-26||35,237.0|
|Hammerhead Resources Inc.||102041006604W600||Karr||Montney Fm||30,041.0||1,001.0||4,356.0||2022-11-29||46,504.0|
|Spartan Delta Corp.||100082406905W600||Elmworth||Montney Fm||29,852.0||995.0||2,308.0||2023-01-02||696.0||29,853.0|
|Whitecap Energy Canada Ulc||100053506405W600||Kakwa||Montney Fm||25,667.0||856.0||3,886.0||2020-02-01||744.0||481,573.0|
|Hammerhead Resources Inc.||102051006604W600||Karr||Montney Fm||25,394.0||846.0||4,428.0||2022-11-29||48,161.0|
|Spartan Delta Corp.||100153106802W600||Bezanson||Montney Fm||24,341.0||811.0||2,888.0||2022-12-01||40,279.0|
|Spartan Delta Corp.||102113106802W600||Bezanson||Montney Fm||23,416.0||781.0||3,518.0||2022-12-01||40,752.0|
|ARC Resources Ltd.||102142606304W600||Kakwa||Montney Fm||22,845.0||762.0||3,070.0||2022-09-17||87,496.0|
|Hammerhead Resources Inc.||100121006604W600||Karr||Montney Fm||22,760.0||759.0||4,915.0||2022-12-02||32,183.0|
|ARC Resources Ltd.||105043506304W600||Kakwa||Montney Fm||22,468.0||749.0||2,938.0||2022-09-26||95,682.0|
|Strathcona Resources Ltd.||100041206204W600||Kakwa||Montney Fm||22,363.0||745.0||3,407.0||2022-11-19||447.0||74,659.0|
|Hammerhead Resources Inc.||103121006604W600||Karr||Montney Fm||20,857.0||695.0||3,654.0||2022-11-22||42,272.0|
Looking to the years ahead, Hammerhead Resources has announced various future deployments of its expanded pool of capital. Major planned investments include facility expansions in North and South Karr as well as an expansion in Carbon Capture & Storage (CCS) capacity that is estimated to require $240 million in investment between 2024 and 2029. These planned developments are expected to contribute to an expansion of overall drill-to-fill infrastructure capacity of 80,000 BOE/d by the end of 2023. The company has 17% of its oil production and 50% of its natural gas production hedged in Q1 2023, with those levels dropping off to 7% and 20%, respectively, in Q4 2023.
For those looking to learn more, go visit BOE Intel.