Ongoing 6 Well Drilling Incl Princess Boomer - 935 boed Mackie Energy
PRAIRIE PROVIDENT RESOURCES INC.
PPR (CAD$0.42) – Target: $2.00 – BUY
Action: Maintain BUY and $2.00 Target Price
This morning, PPR announced the initial drilling and test results from a six well drilling program in its Princess and Wheatland (Wayne) core areas. Test results to date have exceeded expectations, including an excellent test of ~ 935 boe/d (65% oil) from a well in the Princess area. Tie-in operations are underway which should boost production in Q2/17. We maintain our BUY recommendation and $2.00 target price.
Details: Results of Three Wells In Princess and Three Wells In Wayne
Q1/18 Drilling Update: In Q1/18, PPR drilled three Lithic Glauconitic horizontal wells in the Princess core area and three Ellerslie horizontal wells in the Wayne area of its Wheatland core area.
First Princess Well Tests at ~935 boe/d: The Princess-1 well (100% W.I.) flow tested over a four day period at 750 bbl/d of a fluid (80% oil) and 2.0 mmcf/d of natural gas. This equates to ~600 bbl/d of oil plus 335 boe/d of natural gas for a combined 935 boe/d which is an excellent result. The well continues to clean up with ~16% of the total load fluid recovered to date.
Second Princess Well on Production at ~355 boe/d: The Princess-2 well (100% W.I.) flow tested over a three day period at 375 bbl/d of a fluid (40% oil) and 2.0 mmcf/d of natural gas. The well has been tied-in and is currently producing ~90 bbl/d of oil and 1.4 mmcf/d of natural gas or ~355 boe/d (25% oil). Oil cuts continue to increase as the well cleans up. The Princess-3 well (100% W.I.) was recently completed and is expect to begin flow testing in the new few days. Drilling and completion costs have averred $1.1 million per well.
Wayne Wells Targets Oil Sweet Spot: The Wayne-1 well (95% W.I.) swab tested over a five day period showing strong fluid levels and very little natural gas similar to the 04-26-017-21W4 well, which is one of the better wells in the area. The well has recovered 33% of the total load fluid. The Wayne-2 well (100% W.I.) flow tested over a four day period at ~1,000 bbls/d of a fluid (25% oil) and 0.4 mmcf/d of natural gas similar to other wells drilled in the Wayne area. The Wayne-3 well (100% W.I.) was recently completed and is expected to begin testing in the new few days. Drilling and completion costs have averaged $1.6 million per well.
Impact: Positive. Very Strong Initial Well Results
The initial results of the Q1/18 drilling program are very encouraging and we expect significant oil weighted production additions in Q2/18 and Q3/18. Subject to commodity prices and longer term results of the new wells, drilling operations are expected to recommence in July 2018, with up to 10 additional wells in the balance of the year.
The company remains highly undervalued on a cash flow, reserves and NAV basis. In addition, there is no value in the current share price for PPR’s Quebec assets or for the potential for a favorable ruling from the arbitration process. We feel damages of between US$25 million to US$60 million would certainly be in the realm of possibility. A ruling in PPR’s favour could have a major positive impact on the stock price. We reiterate our BUY recommendation and out $2.00 target price.
By Bill Newman – 2018/03/20