courtesy of carswell
Back in Alberta, would-be Alberta Montney producer Blackbird Energy Inc. (BBI) added two cents to 17.5 cents on 4.63 million shares, after entering a long-awaited agreement to process the gas produced from its liquids-rich Elmworth project. This agreement, trilled the press release, is the "critical step ... [that] evolves Blackbird from an explorer to a producer." Investors have been waiting many months for this moment. Blackbird's original plan, as announced last September, was to enter a processing agreement in the fall of 2015 and start production in the first half of 2016. At the time of the announcement, the company had just spudded its third Elmworth Montney well, following up on the two it drilled in 2014. This third well tested at over 1,700 barrels of oil equivalent a day in January. In February, Blackbird announced a pipeline service agreement to take effect on Oct. 1, which was good, but there was still no processing agreement. Now Blackbird has at last come to a processing and transportation arrangement. Start-up is expected to occur by the beginning of next year, or possibly Nov. 1 of this year, subject to conditions. With the pipeline and processing agreements in place, Blackbird has a few other details to take care of -- such as building a gathering system and drilling a water disposal well -- and then it hopes to start tying in production from its three wells. According to a National Bank Financial research note dated March 30, Blackbird estimates its current behind-pipe production from these wells at 3,100 barrels a day. The company has not estimated the costs of actually achieving production, but its March 28 SEDAR filings warned that these are "anticipated to be material." The company had working capital of $7.4-million as of Jan. 31 and expects to "require further funding in the form of additional equity issuances, the assumption of debt, off-balance sheet financing or a combination thereof in order to meet its planned long-term growth objectives and to fund future development activities."