BTE Duvernay InfoBaytex reported two significant oil discovery light oil discovery wells in the Pembina area located about 5-7 miles south of their initial 14-36 discovery well that we highlighted in a map in our quarterly preview here. The two wells established very strong IP30 rates averaging ~750 boe/d (88% oil & liquids). Costs were undisclosed and we are of the view that initial wells are not representative given the exploratory nature and costs associated with testing. Of the 88% oil and NGLs, ~450 bbl/d was oil, ~150 bbl/d was C5+ and the remainder was associated NGLs. As shown in Figure 3, liquids rates from BTE/RRX’s 14-36 discovery well seem to be consistent after 6 months at 85% oil & NGLs. This discovery well has produced 42,000 bbl of oil in 6 months. In addition Paramount (POU-T; OP; TP $25.00, here) drilled the top Duvernay well in August on trend to the south which is producing 725 boe/d (88% oil & NGLs) in the second month. Going forward Baytex’s next two Duvernay wells to the north and Journey’s (JOY-T; SP; TP $2.75, here) well at Gilby will provide additional data points to understand the performance of the reservoir on the west side of the reef. Notwithstanding observation of the two wells decline profile, we believe IP30 rates at this level with development well costs of ~$6.5mm would allow this play to compete with any in Western Canada.