Comparing RMP and Velvet Downspacing ApplicationsI finally spreadsheeted the recent AER holding applications submitted by RMP (Oct 11th) and Velvet (Nov 13th) involving lands in immediate proximity to each other. Both applications were prepared by the same company (interestingly enough): Benoit Regulatory Compliance. The goals of the comparison was to gain insight on how similar the two companies evaluate the Elmworth Montney and to improve understanding/confidence of the area's Montney potential. The good news is that overall there were no significant differences in the results of their Montney JJJ pool and that differences can be explained by the degrees of conservativeness in their work. Also the results in oil EUR (estimated ultimate recovery) for the JJJ pool fit very well with the "hot off the presses" IBR November corporate presentation. The comparison exercise was a definite confidence booster that IBR's new 1.5 mile 80 stage "typical" well design will perform as needed to economically develop their lands.
Note that Velvet's Nov 13th application is for downspacing lands about 3 sections north of already downspaced Velvet lands that effectively bracket RMP's downspacing application lands in-between. Here's a comparison summary:
| | RMP | Velvet |
| Holding Application Date | Oct 11/17 | Nov 13/17 |
| # of Sections | 9 | 19 |
| Buffer (m) | 100 | 100 |
| Interwell Spacing (m) | unlimited | unlimited |
| Near term wells from applic (from Fig 1's) | 38 | 9 |
| exist producers | 3 | 15 |
| Total near future producers | 41 | 24 |
Montney JJJ Pool Comparison:
| | AVERAGE PER WELL - MONTNEY JJJ POOL (12 wells) | |
| Company | Curr Oil Rate (bbls/d) | Cumm Oil to Date (mbbls) | Cumm Gas to Date (mmcf) | Cumm H2O to Date (mbbls) | Oil EUR (mbbls) | Avg End Prod'n Date |
| RMP | 94.4 | 160.1 | 2002 | 307.0 | 213.7 | 29-Aug-27 |
| Velvet | 86.2 | 162.4 | 2048 | 314.0 | 204.1 | 20-Oct-24 |
Note that Velvet is within a couple of percentage points on the "Cumm to Date" for oil/gas/water - that difference I believe is related to having a bit more historic data in the evaluation. The difference in current oil rate (~9%) and Oil EUR (~4.5%) is due to Velvet being more conservative on their oil forecasting of the 12 JJJ pool wells. However looking at RMP's forecasting I even think they're also conservative but have better trend fitting to the historical data. Both companies use exponential declines for oil rate even though the data shows hyperbolic behaviour. My belief is the average JJJ pool well oil recovery will easily exceed RMP's estimate. So both companies are not agressive in evaluating their Montney analog. That's good news because it means that the type curve which the economics are based on are born from that conservative attitude.
Looking at the moderate type curve recovery in IBR's November presentation: 180mbbls oil, 3.0 bcf raw gas & 25 bbls/mmcf NGL yield I see those numbers as very reasonable. That leaves room to support the high case from improving well design to 1.5 mile laterals & 80 stage completions. The quick payouts of 1.4 & 1.0 years respectively based on McDaniel pricing did catch my attention and I'm guessing I'm not the only one. I have looked at the IBR presentation in-depth and will comment further on it later but overall I liked it and found the bones of the work to be solid.