Delphi Energy Corp. DPGYF

DEE: The most expensive MONTNEY wells (C$7.5 million)

[George98]

Aside the debt overhang and the leverage of 3 times, DEE has the most expensive wells in the Montney space at C$7.5 million each. All know that the Montney wells at Bigstone and Simonette (Cequence-CQE's wells) are the most expensive wells and this does not bode well for any junior producer with high leverage and limited liquidity. If something goes wrong (i.e. cost overruns, commodity prices), bankruptcy is very likely. 

All know that the junior producers need cheap Montney wells with high IRRs and very low leverage (less than 1) to grow their production without risking their survival and without the risk of bankruptcy. 

DEE has tried to reduce this cost over the last two years but it still remains very high on an absolute and relative basis.

I quote from DEE's most recent press release:

" In 2016, the Company continued the trend of reducing drill and completion costs for its horizontal Montney wells at Bigstone reporting a record low gross average of $7.5 million per well compared to $8.1 million per well in 2015, and $10.4 million in 2014. "