New Operational Update, Estimates and expanded Credit
Blackbird Energy Inc. Provides an Operational Update Including Significant Upper Montney Test Results, an Expanded Credit Facility, Estimated Monthly Sales Volumes and a Preliminary Northern Development Program
2018-03-13 03:00:14 AM ET (GlobeNewswire)
Blackbird Energy Inc. (TSX-V:BBI) ("Blackbird" or the "Company") is pleased to announce test results from its 3-27-71-7W6 Upper Montney Delineation well, expansion of the Company's credit facility to $20 million, estimated monthly sales volumes and productive capacity, preliminary plans for a development program north of the Wapiti River, and results from the Company's 2018 Annual and Special Meeting of Shareholders (the "AGM").
"The successful testing of our 3-27-71-7W6 Upper Montney Delineation well, including pressures and natural gas rates that exceeded management expectations, further supporting our geologic model that over 114 sections (72,960 acres) of our lands are situated in the over-pressured liquids rich Montney corridor at Pipestone/Elmworth. With the multi-interval potential of our land now largely de-risked, and the initial capital liquidity provided by an expanded $20 million credit facility, Blackbird is positioned to move ahead with its development program north of the Wapiti River. We have an expanding relationship with our lender, ATB Financial, and on behalf of Blackbird and our shareholders, I would like to thank ATB for their continued support." said Garth Braun, President, CEO and Chairman of Blackbird.
Highlights
-- Upper Montney Delineation Test: Blackbird's 3-27-71-7W6 Upper Montney Delineation well flowed at an average estimated sales rate of 1,188 boe/d (53% liquids, liquids/gas ratio of 190 bbls/mmcf) over the final 48 hours of an 12-day production test. Flowing casing pressures increased steadily over the final test period to 7,289 kPa as choke sizes were reduced to limit natural gas production and stay within regulatory flaring restrictions. Management is very encouraged by this short-term test result and anticipates that liquid and natural gas rates could improve with greater frac water load recovery from longer production times and the installation of production tubing.
-- Expanded Credit Facility: Blackbird and its lender, ATB Financial, have agreed to increase the Company's revolving operating loan facility from $1.0 million to $20.0 million.
-- February Sales Production: Blackbird's total corporate February sales production averaged an estimated 2,252 boe/d (59% liquids) for the 15 days the Company was able to produce during the month.
-- Estimated Productive Capacity: Subject to the tie-in of the 3-27-71-7W6 Upper Montney and 2-20-70-6W6 Middle Montney Delineation wells, management estimates Blackbird's current unrestricted flowing productive capacity from its 10 (10.0) operated wells to be approximately 6,000 boe/d.
-- Preliminary Northern Development Program: Blackbird expects to be able to meet its initial 20 mmcf/d commitment at the proposed Tidewater Midstream & Infrastructure Ltd. deep cut sour gas processing facility located near Wembley, Alberta (the "Tidewater Facility") through the drilling, completion and tie-in of five (5.0 net) additional wells north of the Wapiti River.
Upper Montney Delineation Test
Blackbird is pleased to provide test results from its 3-27-71-7W6 Upper Montney Delineation well, which is the Company's first operated delineation well north of the Wapiti River and is approximately 14 kilometers north of Blackbird's previous operated development drilling. Production test results are outlined below:
Well Final 48 Hour Rate of 12 Day Production Test
Condensate (bbl/d) Natural Gas (mcf/d) NGLs (bbl/d) LGR (bbls/mmcf) Total (boe/d)
300 3337 334 190 1188
Lateral Length (meters)
2200
3-27-71-7W6 (Upper Montney) 1,1
1) Numbers may not add due to rounding.
2) All disclosed production rates and volumes are presented net of any load fluid recovery. By the end of the 12-day production test period the well had recovered approximately 12% of load frac water.
3) All volumes are based on estimated sales production data per expected deep cut recoveries through future processing at the proposed Tidewater Facility.
4) The final 48 hour rate does not include a period at the end of the test where the well was highly constrained while the Company was in the process of applying for an expanded flare permit, which was not granted.
5) Liquids/gas ratio (LGR) includes condensate and NGL production.
The Company cautions that short-term test rates are not necessarily indicative of long-term well or reservoir performance or of ultimate recovery. See "Short Term Test Rates" below.
The 3-27-71-7W6 Upper Montney Delineation well was drilled to a total depth of 4,604 meters with a lateral of 2,200 meters and completed over 59 intervals using the STAGE System exclusively. Approximately 4,500 tonnes of sand was placed representing a completion intensity of approximately 2.0 tonnes per meter. Over the final 48 hours of production testing the well flowed at an average estimated sales rate of 1,188 boe/d (53% liquids, LGR of 190 bbls/mmcf) based on expected deep cut recoveries through future processing at the proposed Tidewater Facility. At the end of the test period the well had only recovered approximately 12% of load frac water. Based on previous results, management expects to see increasing condensate and liquids yields as the well cleans up to approximately 30-40% load frac water recovery. Flowing casing pressures increased steadily over the final test period to 7,289 kPa as choke sizes were reduced to limit natural gas production and stay within regulator y flaring restrictions. Management is very encouraged by this short-term test result and anticipates that liquid and natural gas rates could improve with longer production times and the installation of production tubing. The well will remain shut in until the proposed Tidewater Facility is operational, which is currently expected to occur in the second quarter of 2019.
Credit Facility Expanded to $20 Million
Blackbird and its lender, ATB Financial, have agreed to increase the Company's revolving operating loan facility from $1.0 million to $20.0 million. The terms of the facility are otherwise unchanged. Blackbird may, at its option, elect to submit an updated engineering report in advance of its required annual review for the purposes of a borrowing base redetermination. Blackbird currently has no debt, and with the expanded credit facility has over $20 million of working capital funding available. The Company expects to continue its conservative approach to debt, and is currently evaluating non-dilutive options for additional capital liquidity to complement its increased credit facility and prepare for future development.
February Sales Production of Approximately 2,252 boe/d (59% liquids)
Blackbird is pleased to announce that its total corporate February sales production averaged an estimated 2,252 boe/d (59% liquids) for the 15 days the Company was able to produce during the month. Estimated sales production averaged 1,173 boe/d on a calendar day basis through February, with volumes being impacted by approximately 13 days of unscheduled third party downtime. The Company anticipates a similar level of third party downtime impact in March, with a return to consistent operations thereafter. The February volumes do not include approximately 5,285 barrels of condensate produced during production testing of the Company's 2-20-70-6W6 Middle Montney Delineation well.
Estimated Behind Pipe Volumes
Subject to the tie-in of the 3-27-71-7W6 Upper Montney well to the Tidewater Facility (which is anticipated for the second quarter of 2019) and the 2-20-70-6W6 Middle Montney Delineation well to the Company's 100% owned and operated Pipestone/Elmworth gas processing facility (which is anticipated for Fall 2018), management estimates Blackbird's current unrestricted flowing productive capacity from its 10 (10.0) operated wells to be approximately 6,000 boe/d based on the Company's own production test data. The Company cautions, however, that future production and reservoir performance cannot be predicted with certainty and may be less than estimated, and may also be subject to factors that restrict production to a level below an unrestricted flowing productive capacity. Blackbird is currently subject to a take-or-pay gas handling agreement for firm transportation and processing of sour natural gas that limits the Company to approximately 6.0 mmcf/d of natural gas and associated liquids. This estimate of productive capacity does not include production from the Company's working interest in 6 (1.4 net) non-operated wells.
Preliminary Northern Development Program
Based on the successful testing of the Company's 3-27-71-7W6 Upper Montney Delineation well, which exhibited natural gas rates and casing pressures that exceeded management expectations, Blackbird now anticipates being able to meet its initial 20 mmcf/d delivery commitment to the proposed Tidewater Facility through the drilling, completion and tie-in of five (5.0 net) additional wells north of the Wapiti River. This compares to previous internal estimates for up to 10 (10.0 net) wells required to meet initial processing commitments.
The Company has made significant progress toward securing a compressor site and obtaining authorization to commence surveying right of ways for future pipelines. Blackbird has successfully acquired 4 pad sites for near-term development, and has identified, mapped and surveyed an additional 6 pad sites as a part of its ongoing development planning. The Company currently expects to commence its single-rig drilling program north of the Wapiti River in the summer of 2018.
Results of the 2018 AGM
Blackbird is pleased to announce that all items of business considered at the AGM held on March 7, 2018 were approved by shareholders, including: the election of Garth Braun, Kevin Andrus, Sean Campbell, William Macdonald, Ron Schmitz and Burton Ahrens as directors of the Company until the next AGM; the re-appointment of Davidson & Company LLP as the auditors of the Company; and the annual confirmation of the Company's incentive stock option plan. To view an archived recording the 2018 AGM please refer to the Blackbird website.
About Blackbird
Blackbird Energy Inc. is a highly innovative oil and gas exploration and development company focused on the condensate and liquids-rich Montney fairway at Pipestone/Elmworth, near Grande Prairie, Alberta.
For more information, please view our Corporate Presentation at www.blackbirdenergyinc.com or contact:
Blackbird Energy Inc.
Garth Braun
Chairman, CEO, and President
(403) 500-5550
gbraun@blackbirdenergyinc.com
Allan Dixon
Manager, Business Development
(403) 699-9929 Ext. 103
adixon@blackbirdenergyinc.com