After a holiday hiatus, we are back with another entry in our Private Company Review series. This article’s focus is Pacific Canbriam Energy, a private producer operating in the BC Montney. The company’s current form was created through Pacific Oil & Gas Limited’s acquisition of Canbriam Energy Inc. in June 2019. It’s also worth recalling that, prior to its acquisition by Pacific, Canbriam acquired all of Suncor’s northeast British Columbia mineral land holdings in March 2018, in exchange for equity ownership in Canbriam. The company, which is integrated with pre-construction LNG processing facility Woodfibre LNG, is a natural gas-weighted E&P that accounted for over 68,000 BOE/d gross licensed production in November 2023. The company’s holdings are concentrated in the core of the BC Montney near Fort St. John, and Pacific Canbriam owns all its infrastructure, including processing plants, gathering pipelines, and water handling assets.
The company’s assets are concentrated at Kobes, Altares and Groundbirch. This places them in close proximity with some of the biggest names in the Montney; CNRL, Shell, ARC Resources and Crew are among the producers with crown mineral rights adjacent to Pacific Canbriam’s positions, while Tourmaline and Petronas are to the north. Many of these high-profile neighbours consider assets in this region as core holdings. The company’s Altares assets are proximal to CNRL’s Graham Montney assets and ARC Resources’ assets at Attachie. In addition, Pacific Canbriam’s assets at Groundbirch are contiguous with Shell’s Groundbirch operation that has production capacity of 554 mmcf/d.
With respect to the production share of the company’s assets, Pacific Canbriam’s projects at Altares have been responsible for the vast majority of its production for the past 5 years. This raises an interesting development question, as the company’s recent licensing and drilling activity is concentrated in Altares as well (we elaborate further down below). This makes it unclear when, or perhaps even if, the company will pursue further development of its assets in Groundbirch and Kobes.
The company has grown its overall production impressively in the past 3 years, boosting gross licensed production from around 37,000 BOE/d in July 2020 to over 68,000 BOE/d in November 2023. With respect to commodity shares, NGLs and condensate accounted for 12.3% of overall production in November 2023. Note that gross licensed production doesn’t account for potential working interest arrangements, although this is likely to be a mild issue given the fact Pacific Canbriam seems to have 100% working interest in its main operating areas.
Pacific Canbriam’s infrastructure is a key source of competitive advantage. The company has established a comprehensive infrastructure base that is spread across Altares and Kobes. This is particularly true at Altares, which is the company’s main development focus. The company benefits from owning and operating a robust network of pipelines; Pacific Canbriam is the registered owner of 154 pipelines that transport treated/fresh water, sour gas, sweet gas, and fuel gas. It’s interesting to note that the company’s Groundbirch assets do not have any associated facilities or active pipelines; this may suggest that the company would need to build out some infrastructure in the area if it decided to go ahead with future development at Groundbirch.
Since Pacific’s transformative acquisition of Canbriam, there appears to have been only one other important transaction in which the company acquired mineral rights. As such, Pacific Canbriam’s recent history in the Montney is a tale of organic growth. In order to understand Pacific Canbriam’s licensing activity from the past two years, we prepared a map juxtaposing the company’s new licences over this period compared to its pre-existing wells. It’s worth noting that all of the company’s licensing appears to have been carried out at Altares, with Groundbirch and Kobes registering no new licences.
|Number of Pacific Canbriam Spuds
Below we have shown the production additions by year of spud date for Pacific Canbriam. So far, 2023 spuds have added 7,545 BOE/d of production, although peak production from 2023’s spuds would not be expected until sometime in 2024.
On an individual well basis, the company has seen a trend of improving IP rates over time. The chart below shows the average daily production for the company’s wells based on the first 90 days on production. Not shown are the 2023 spuds due to a small sample size of wells that have 90 days of on production history.
Top 10 Wells
Pacific Canbriam has been operating some successful gas wells. The company’s top 10 wells by recent production all produced over 5,000 mcf/d in November 2023. All 10 were at Altares, and they were split evenly between spuds from 2023 (4 wells), 2022 (4 wells) and 2020 (2 wells). We were impressed to see multiple wells from 2020, suggesting strong longer-term well economics in Pacific Canbriam’s main area. While Pacific Canbriam’s wells don’t have the initial surge of production that we have seen from some operators in the Groundbirch/Septimus/Sunrise area, the relatively flat production profile in some of those longer producing wells is likely something that the company is encouraged by. Perhaps the company even manages these wells or chokes them back a bit to ensure a flatter decline profile.
|Recent Gas (mcf/d)
|Recent Gas (BOE/d)
Moving on to Pacific Canbriam’s future, we believe there are a number of key considerations. Firstly, we believe it is important to keep tabs on Woodfibre LNG’s progress. Given Pacific Canbriam’s ties to the project, and agreement to supply natural gas to the facility when it is complete, we may see the company’s production ramp up in tandem with Woodfibre’s construction (which is expected to intensify in 2024). See Woodfibre LNG’s 2023 recap here. Secondly, we will be tracking the company’s licensing activity in 2024. While continued licensing at Altares seems to be a foregone conclusion, it will be interesting to see what the company does with its Groundbirch and Kobes assets, which have yet to see much activity. These assets have likely been deprioritized as a result of not being contiguous with the main Altares block, but it’s also possible that they are being held “in reserve” to facilitate sustainable production ramp up in the coming years. The first clues of a change in the company’s treatment of Kobes or Groundbirch may be found in infrastructure development, given Pacific Canbriam’s clear preference for ownership of its pipelines and facilities.
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