BNE has extensive Belly River rights (92% oil/liquids and similar IP 365 production).
IPO NR quote (inplay oil is drilling this, is a partner and has lot's of adjacent/shared acreage): Increased Belly River program in 2024 given the high oil weighting and high netback nature of this play. This area is defined by high light-oil weightings that receive a premium to the Mixed Sweet Blend (“MSW”), our pricing benchmark. Our two recent horizontal wells drilled in the area came online in November 2022 and have had operating netbacks of approximately $71.25/boe since being brought on production, and light oil and liquids weightings of approximately 94% to date. These wells have had very low decline rates over this period with average IP rates per well of 98 boe/d (97% light crude oil and NGLs) and 115 boe/d (92% light crude oil and NGLs) over their first 90 and 335 days respectively.
Montney (~65% oil vs 50% for Cardium), back of the envelope capital efficiencies based on value (not BOE):
Montney vs Cardium capital efficiencies: Since BNE was restricted at 523 boe/d with a peak of 753 boe/d on this exploration well: say just under mid point is 625 boe/d IP 365. That's 62%-65% 40 degree API oil with BNE Cardium being 50% oil. That's a big difference since oil is ~ 80% of revenue.
The comparison then looks as follows:
- Cardium IP 365 is 112 boe/d with 50% oil (56 BO/d) - cost $ 2,5 mln
- Montney IP 365 est @ 625 boe/d (~ 394 BO/d or 7x the amount of oil) - cost $ 3,5 drill, $ 4,2 mln complete ($ 7.7 mln)
Considering the oil weighting of 80% in $ value and 20% gas (prob lower now)
- The ratio in value is then Montney being 6.4x value in $ production vs
- $ 7.7 mln / $ 2,5 mln = 3.1 x the cost or 200%+ better capital efficiency
In simple terms: a Montney well brings more than twice the cash flow value per 1$ spend (and more than halves the payback time ~ 6 months) - much better than any Cardium location.
R.