Grimshaw area update
New Montney oil pool discovery at Grimshaw
Bellamont recently drilled two vertical wells (1.75 net) at Grimshaw to delineate the western portion of the Grimshaw Triassic D pool. The delineation program has resulted in a new Montney oil pool discovery. In addition, both of the vertical delineation wells encountered the same Montney reservoir sand producing in the Triassic D pool. Bellamont completed and tested the Montney D sand in one of the wells, which resulted in trace amounts of oil together with formation water. The second well has yet to be tested in the Montney D sand.
The new pool discovery well was completed with a single five-tonne fracture stimulation. During the 26 hours of swabbing, the well tested an average of 140 barrels per day of 29-degree API (American Petroleum Institute) oil with less than a 10-per-cent water cut at the end of the test. This production test result is similar to Bellamont's original vertical well discovery in the Triassic D pool. The corporation has initiated the process of tying the well in to its 100-per-cent-owned oil battery with production expected in the first quarter of 2012 at an initial rate of approximately 60 barrels per day.
Based on the corporation's interpretation of 3-D seismic over its lands, Bellamont believes the new Montney oil pool has the potential of being similar in size and scope to the Triassic D pool. Currently, Bellamont is producing approximately 535 barrels of oil equivalent per day (490 barrels per day oil) from the Triassic D pool from 11 wells (10 horizontal wells and one vertical). Bellamont expects to develop the new pool with multi-stage fraced horizontal wells in a similar manner as the Triassic D pool.
The delineation wells results have reinforced the corporation's confidence in its ability to image reservoir-quality Montney sand on its 3-D seismic. Based on the recent delineation drilling, core analysis and reservoir modeling, the corporation now estimates its land at Grimshaw contains approximately 110 million barrels of discovered petroleum initially in place (DPIIP) in the Montney formation. In total, when combining the existing Triassic D pool and the new pool discovery, Bellamont estimates it has 52 (52 net) horizontal drilling locations at Grimshaw, all of which are supported by 3-D seismic.
Discovered petroleum initially in place is defined in the Canadian Oil and Gas Evaluation Handbook as the quantity of hydrocarbons that are estimated to be in place within a known accumulation. Original gas in place is a more commonly used industry term when referring to gas accumulations. DPIIP is divided into recoverable and unrecoverable portions, with the estimated future recoverable portion classified as reserves and contingent resources. There is no certainty that it will be economically viable or technically feasible to produce any portion of this DPIIP except for those portions identified as proved or probable reserves. A recovery project cannot be defined for this volume of DPIIP at this time, and, as such, it cannot be further subcategorized.
Grimshaw area acquisition
Bellamont has entered into an agreement to acquire a minority partner's interest in the Grimshaw area. The acquired asset consists of 13 gross sections (5.2 net) of land and includes a 25-per-cent working interest in two joint Montney oil wells. Following closing of the acquisition, Bellamont will have a 100-per-cent working interest in 17 contiguous sections of lands at Grimshaw.
Reservoir simulation at Grimshaw
Bellamont recently undertook a reservoir simulation study of the Triassic D pool with Epic, a division of Baker Hughes, Canada, an independent reservoir engineering firm. The study supports a 10.5-per-cent primary recovery factor based on eight horizontal wells per section, and a 19-per-cent secondary recovery factor possible under water flood. Bellamont has applied for regulatory approval to initiate a pilot waterflood project in 2012.
Reserves update
Bellamont has recently undertaken a preliminary review of its oil and gas reserves with its independent evaluator, GLJ Petroleum Consultants Ltd. The evaluation was conducted effective as of Dec. 31, 2011, utilizing GLJ's Oct. 1, 2011, price forecasts. The preliminary report indicates total proved reserves of 6,912,000 barrels of oil equivalent (48.6 per cent oil and natural gas liquids) with a net present value of future net revenue of $106.3-million and total proved plus probable reserves of 15,006,000 barrels of oil equivalent (45 per cent oil and natural gas liquids) with a net present value of future net revenue of $190.7-million. These findings represent a 30-per-cent increase in total corporate proved plus probable reserves and a 26-per-cent increase of net present value of future net revenue over 2010