Improved supply costs driven by application of multilateral drilling. The Mannville has historically been exploited using vertical wells with horizontals improving productivity and accessibility over the last decade. More recently, the application of Clearwater-style open-hole multilateral drilling has resulted in a material uptick in productivity and economics, given favourable drilling and completion costs (shallow depth, no fracture stimulations). The multilateral well design maximizes reservoir contact, improving flow dynamics, and is being applied to areas that were previously under-exploited but well understood from a resource perspective. The Mannville has exhibited an uptick in activity over the last several years, with licensing and spud activity continuing to trend higher (slides 10–17); we expect this to drive meaningful Mannville oil production growth over the next 5+ years.
RBC ElementsTM analysis demonstrates potential to unlock decades of incremental drilling inventory. Working with RBC ElementsTM, our in-house data science team, we have established a view of potential inventory across key Mannville plays, utilizing a proprietary geospatial algorithm; we have outlined roughly 20 years of unrisked industry drilling inventory (slides 3–6), though incremental capital could shorten the timeline. Of note, we have seen similar applications in other plays (e.g., Saskatchewan Bakken), which could lead to broader use and revitalization of mature oil plays across the WCSB.
Overall play outlook, implications for the broader basin. While a resurgence in activity across the Mannville group is likely to be a key driver of conventional oil growth in the coming years, we do not expect this to result in egress constraints, as Canada remains heavily weighted to the oil sands, where new greenfield investment remains muted. With the startup of the Transmountain (TMX) pipeline expansion, we expect the WCSB to have approximately 200–300 kbbl/d in spare export capacity in 2024, not including rail capacity (notes here and here).
Key areas to watch. While it is difficult to assess where the most capital will ultimately be deployed, we have outlined several Mannville group plays on slides 3–8, including the Sparky, Glauconite, Cummings, and Ellerslie given the highest level of activity over the last five years. Notably, activity has also picking up in the Lloydminster, Mannville, General Petroleum, Basal Quartz, and others, led by a mix of public and private operators.
Top names with exposure to the Mannville trend. Producers with direct Mannville exposure include Canadian Natural Resources (CNQ), Cenovus (CVE), Strathcona Resources (private), Cardinal Energy (CJ), Baytex (BTE), Whitecap Resources (WCP), and Tamarack Valley (TVE), though we note that a wider group of producers could benefit from Mannville-style completions and drilling techniques. Each Canadian royalty company has indirect exposure via land positions as shown on slide 14, though PrairieSky Royalty (PSK) has the most leverage to the broader play with more than 3 million acres of exposure (1.1 million in the Mannville heavy oil region of Central Alberta).