They already gave guidanceSubject to completion of the Ante Creek Disposition, the Company’s Board has approved a $45 million capital budget for 2017. The capital plan will include the drilling of three (3.0 net) Montney horizontal wells at Gold Creek and four (4.0 net) Montney horizontal wells at Waskahigan. RMP will also proceed with the installation of a gathering line and production equipment at Gold Creek, which will provide preliminary production data to allow the Company to assess full field development potential. Based on its 3-22-68-3W6M well (the “3-22 Well”) flow test result and publicly available information, RMP is quite encouraged with and confident in the Montney reservoir potential at Gold Creek given that production from a Montney pool in close proximity to RMP’s 3-22 Well indicates that there may be a significant hydrocarbon resource in the area. This proximal Montney pool was recently producing approximately 13,000 boe/d from 18 wells. Drilling extension of this reservoir’s pool boundaries is continuing by area operators, along with the installation of third-party operated mid-stream production infrastructure.
The modest 2017 drilling program at Waskahigan is expected to offset corporate declines and maintain pro-forma base production levels. The scheduled tie-in of the Gold Creek 3-22 Well in addition to successful follow-up Gold Creek drilling will enhance RMP’s 2017 production profile. The Company hopes to have completed the tie-in of the Gold Creek 3-22 Well by the end of the first quarter of 2017. Infrastructure commissioning and corresponding timing of expected production additions at Gold Creek, however, is dependent on ‘weather-friendly’ operating surface conditions during this forthcoming winter. The Company expects to have greater clarity on the progress of its key Gold Creek infrastructure initiatives during the first quarter of 2017.
A second well will be drilled utilizing the same surface location in the first quarter and will be tested and produced through the new infrastructure. As such, RMP will provide updated guidance at the end of the first quarter of 2017. At Gold Creek, the Company has amassed a large undeveloped land base consisting of 78 (77 net) sections (49,920 gross acres) of operated acreage. In 2017, RMP will start to delineate the areal extent of the hydrocarbon-bearing Middle Montney Formation trend in Gold Creek with the capital program outlined above, in anticipation of proving-up its Gold Creek land base for future development. Preliminary analysis of the financial impact on RMP’s Gold Creek well economics, as a result of the Alberta Government’s new Modernized Royalty Framework (“MRF”), suggests a significant, positive impact on the Company’s estimated type-well net present value and the overall value of the Company’s Montney light oil drilling inventory. The Gold Creek area may also qualify for the Alberta Government’s Emerging Resources Program (“ERP”), which would be expected to further enhance the play economics. The Company estimates that it has potentially in excess of 100 locations at Gold Creek to drill, which are not included in the reserves assigned in the Company’s year-end 2015 independent reserves report. Continued exploration and step-out drilling success, augmented with its sizeable acreage ‘footprint’, will position Gold Creek as a long-term growth asset for the Company. RMP’s Gold Creek type-well used in its budget forecasting, determined by the Company’s internal, qualified reserve evaluator’s review and analysis of proximal Middle Montney well production performance, assumes an estimated first year risked average production rate between 360 boe/d to 535 boe/d (150 bbls/d to 225 bbls/d of light oil). RMP Energy Inc. 4 At Waskahigan, the Company’s hybrid slick water (“HSW”) fracture completion technique has resulted in improved well productivity, which has significantly improved the Waskahigan well project economics. The Company’s Waskahigan type-well used in its budget forecasting, which is determined by RMP’s internal, qualified reserves evaluator’s review and analysis of the average well production profile of its nine producing HSW wells, assumes an estimated first year risked average production rate of 195 boe/d (125 bbls/d of light oil) The Company views its Waskahigan area as a moderate growth asset with a substantial future inventory of approximately 200 potential undeveloped drilling locations to which the HSW completion technique can be applied (of which only 52 locations have been assigned reserves in the Company’s year-end 2015 independent reserves report).