It’s hard to believe that three years ago the Peavine area Clearwater development did not yet exist. Yes, the first well from Baytex in the area had been spud (officially January 2021), but there was nothing in the early results suggesting just how prolific this area was about to become.
The first couple of wells from Baytex came on production in the first half of 2021. The results were good, but still nothing to be overly excited about. The first well on production in March of that year had a peak monthly oil rate of 142 bbl/d. The second well on production in June topped out with a monthly oil rate of 198 bbl/d. Both good wells, but nothing out of the ordinary. It was the third well that gave a glimpse into what this asset was about to become. This well came on production in July and after a couple of months achieved a peak monthly rate of 840 bbl/d by September 2021. That well has cumulatively produced over 271,000 bbls of oil in its lifetime and was still producing 139 bbl/d in March of this year.
Since that initial discovery, Baytex has consistently produced the top Clearwater wells in the basin from the Peavine area. In March of this year, the company had 5 wells producing ~1,000 bbl/d from this development. As of March 2024, the gross oil production from wells licensed to Baytex had reached ~20,500 bbl/d (Figure 3).
Activity levels in the area have steadily increased each year as the chart of spuds shows below (Figure 2). The company doesn’t give guidance for the exact number of spuds, but Baytex does plan to bring 35 net wells on production in 2024, suggesting a bit of a plateau in activity levels in the area.
Figure 1 – Wells licensed to BTE in red
Figure 2 – Peavine area spuds by Baytex
*2024 spuds are YTD and also include 2 new Bluesky wells slightly north of the Peavine Clearwater development area
Figure 3 – Gross production from wells currently licensed to Baytex
Exactly how much inventory of this super prolific Clearwater development is left is unclear. For what its worth, in a recent corporate presentation, Baytex noted that it did increase its exposure to the play, adjusting the size of its partnership with the Peavine Metis Settlement to 90 sections, up from 80 sections. Baytex itself seems to conservatively model its expectations for future development in the area, perhaps knowing that at some point the production from wells in the area might not be quite so otherworldly. While its most recent presentation doesn’t list any type curve assumptions for the Peavine area, some historical presentations did (BOE Intel users can see historical presentations here). As recently as February, the company indicated that its type curve incorporated an IP365 of 195 BOE/d (99% oil), with an expected EUR of 175 MBOE (97% oil). While a type curve of that magnitude would still likely be the class of the Clearwater (that same February Baytex presentation suggested IRRs >500% even with the more conservative type curve), it would be below what has historically been achieved by Baytex in the area. The chart below (Figure 4) uses public data provider Petro Ninja, and shows the average IP365 Oil (bbl/d) achieved by Baytex in the area by year of spud date. Most 2023 spuds don’t have enough production history to properly show IP 365 results, so 2023 data was omitted due to a small sample size.
Figure 4 – Baytex Average IP365 Oil (bbl/d) by Spud Date Year for Peavine area Clearwater
Whether Baytex begins to see slightly more traditional results in the Peavine area going forward or not, it won’t take away from what a homerun this development has been. There aren’t too many companies who can point to organically adding 20,500 bbl/d of oil from one township in only 3 years, except perhaps some Montney companies.