Veren Inc T.VRN

Alternate Symbol(s): VRN

Energy Oil & Gas E&P

Veren Inc. is a Canada-based oil producer with assets in central Alberta and southeast and southwest Saskatchewan. The principal activities of the Company are acquiring, developing and holding interests in petroleum and natural gas properties and assets related thereto through a general partnership and wholly owned subsidiaries. Its core operational areas include Kaybob Duvernay and Alberta Montney, Shaunavon and Viewfield Bakken. Its Kaybob Duvernay is situated in the heart of the condensate rich fairway, Central Alberta, which provides low risk drilling inventory. Its Alberta Montney assets sit adjacent to its Kaybob Duvernay lands, possessing similar resource characteristics including pay thickness and permeability in the volatile oil fairway of the reservoir. Its Shaunavon resource play is located in southwest Saskatchewan. The Viewfield Bakken light oil pool is located in Saskatchewan.

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Post by retiredcfon Mar 22, 2023 9:25am

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Post# 35353268

RBC

Their upside scenario target is $16.00. GLTA

March 21, 2023

Crescent Point Energy Corp.
Kaybob Duvernay Technical Session - Highlights

Outperform

TSX: CPG; CAD 8.80

Price Target CAD 13.00

Our view: Crescent Point hosted a well-attended technical session In Calgary, focusing on technical specifics relating to the company's Kaybob- area Duvernay play. We came away positively with a better understanding of the core drivers of the play, its longevity, and the company's master development plan. We think we could see the company becoming more active here over time, and potentially augmenting lands via additional bolt- on transactions.

Key points:

• CPG's Kaybob Duvernay - Lay of the Land. Crescent Point has assembled its current acreage position of 400,000 Duvernay acres through a series of transactions including Shell Canada (2021), Paramount (2022) and Repsol (2022) with now roughly 45 mboe/d of production, contributing to corporate volumes of 140 mboe/d. As detailed on Exhibit 1 of this note, CPG is now the dominant player in the region with 2 rigs currently running; other key players include Chevron and PetroChina.

Choose your Window - Establishing Per-Well Productivity. CPG's acreage is split into three productivity windows defined as volatile oil, liquids-rich and lean gas - each with their own productivity and makeup characteristics (Exhibits 1 & 2). Generally, we see the strongest economics in the liquids-rich and volatile oil categories, which could offer paybacks well below one year at current strip pricing. We anticipate the vast majority of development for the next several years to focus on these two brackets, reflective of stronger relative economics.
Managing Cost Pressures. Per-well costs in the Duvernay now map to $10.5-12 million per well, depending on the specific region and depth/ length. The company has been effective on the cost management front, with specific examples including drill time efficiencies (now 13-15 drill days), longer laterals (2-3 miles), optimized frac stage spacing (70m from 80m), and frac completion cycle time (4 days vs 5 days). Other initiatives with a view to further enhance economics include a switch to water based drilling fluids (currently oil), changes to perforation design, and cluster spacing. The company noted that its current well spacing is 500m in the volatile oil window, and slightly narrower in gassier regions.
Establishing Break-Evens - Running the Numbers. Analysis of well results via public data is complex, given that the company's Duvernay production is exposed via single stream reporting (which understates liquids volumes). Based on our analysis (a combination of public and company-disclosed data), we estimate that break-even pricing (15% Btax IRR) of the company's volatile oil Duvernay wells resides in roughly the US$45-$50/bbl range.
Future inventory - currently roughly 500 wells. CPG's identified inventory in the Duvernay maps to roughly 500 future wells, of which 126 are currently booked to 2P reserves. CPG expects to drill 40 wells/year in Kaybob (2023-2027: 200 wells), primarily in the volatile oil and liquids rich windows until 2027 (moving toward lean gas window post-2027).