I have been doing some deep research on the Lochend Cardium of late to the come to the bottom of the statement made by the CEO of Pengrowth on June 4th at the RBC Global Energy Conference about the Lochend Cardium being their BEST asset in western Canada Today.
A lot of people know that the Lochend Cardium is the poor sister of the Cardium at Garrington, however this started to change when NAL started to deliver wells with very strong IPs (700 and 800 IP 30) in late 2011; what was odd is that other Lochend players like Trioil were not reporting similar results, Trioil has decent IPs but they are still 150 to 300.
Following the above in January 2012, NAL started talking about the Lochend sweet spot, please refer to slide to 17 & 18:
https://www.slideshare.net/NALenergy/nal-energy-2012-cibc-presentation
in March 2012, Pengrowth (which now owns NAL) stated the following:
Sweet spot outperforming regional type curve by 2-3 times • Delivering payouts in the 8 to 12 month range • NPV15s of up to $6 MM per well - Recycle ratio of 3.5x - 5.0x, follows is the map posted by Pengrowth showing the sweet spot:
https://www.pengrowth.com/uploads/investors/Investor_Presentation_PGF_+_NAE2.pdf
Using the map above, I drew the sweet spot border around Equal Lochend Cardium lands:
As can be seen from the above, virtually ALL of EQU land is in the sweet spot. Meaning 41 potential locations, vs 83 for Pengrowth.
Now here is the master piece, check the type curve for the sweet spot:
Someone may ask, why EQU was not reporting similar production numbers to NAL since they are in the sweet spot?, the answer is: slick water fracs, NAL was using slick water fracs, EQU drilled 8 wells in total up to last year but none of them was using slick water, however the last well that was drilled in May will be fracked with slick water this month, results are expected in a month or so.
Based on the above, it is very likely that this land will fetch top dollars in the strategic review; this is one of the best type curves I have ever seen in western Canada and Pengrowth could bid top dollars to increase their drilling locations by 50%.
Regards,
Nawar