Prospera Energy Inc. (TSXV:PEI) is a clean and safe energy producer with oil and gas operations in Western Canada. The company applied modern and cost-effective horizontal drilling techniques to reduce the environmental footprint of numerous vertical wells.
Here to explain what all that means in greater detail Samuel David, CEO of Prospera Energy. Hello and welcome to The Market Herald Canada.
TMH: Can you provide insights into Prospera’s restructuring initiatives and how they have influenced the improvement of the company’s balance sheet?
David: Prospera was restructured back in 2021. It was an internal position and I came on as an advisor. And we noticed there’s significant amount of reserves oil in place, and so we devised a three-phase development plan.
The first phase was to optimize low-hanging production opportunity and bring the operation to stable, safe operating conditions.
After phase one, we wanted to transform the field from vertical wells to horizontal wells to capture the significant oil in place.
And the third phase of the development plan is to provide energy to the reservoir so the recovery could be optimized and lower the decline of the wells.
Currently we have completed phase one. We elevated the production from 80 barrels to peak rates of 1,200 boes per day. The break-even point is 500 boes per day and we have free cashflow that is re-injected back into the ground to optimize production.
Also, we increased the working interest from 35 per cent to an average of 80 per cent in the overall, in the core properties. We reduced the operating costs from $60-plus per barrel to $38 per barrel, and we are approaching about $33 per barrel currently as we speak.
We also piloted two horizontals in phase one to test our theory. Based on that, we have commenced our drilling program of 10 wells horizontal, and we have completed four horizontals already. Those four horizontals encountered structure pay and oil shows as expected.
TMH: What is the status and progress of the 18-well drilling program aimed at boosting production?
David: As I mentioned, Prospera has executed four lateral legs, four horizontal wells, already, and they encountered structure pay and oil shows as expected. The next set of four wells commencing Saturday and the subsequent to that is additional eight vertical directional wells planned to commence. And these wells will add approximately a thousand barrels per day of incremental production to forecast exceeding this year’s end at 1,800 boes barrels per day.
TMH: And staying on the topic. What are the production expectations for the new modular 18-well program?
David: The drilling program adds a thousand barrels per day to the existing thousand or 1,200 boes per day. The sum of the two takes us well above 2,000 boes per day but the winters in Saskatchewan are harsh, and therefore we considerably estimate 1,800 boes a day.
TMH: Can you tell us how horizontal drilling compares to vertical well technology?
David: Vertical well access three to four metres of the pay, horizontal wells access, nearly 500 metres of lateral pay. Therefore, you’re optimizing your recovery and additional incremental production. And also more importantly along the lateral, there’s vertical wells that we can eliminate because this horizontal will effectively drain those areas.
That allows us to eliminate these vertical leases and reduce the environmental footprint of Prospera, and also reduce corresponding property expenses and property tax expenses, thereby reducing our fixed operating costs.
Not only do we reduce the asset retirement obligation liability on the balance sheet, as well as reducing our fixed operating expenses, leading Prospera to become a low-cost producer.
TMH: What are the plans to pilot an enhanced oil recovery application? And along those lines, what is the process and significance it holds within your operations?
David: A lot of these legacy fields are on primary depletion. The energy has been taken out and Prospera specializes in reservoir management, therefore we will initiate improved recovery and enhanced recovery mechanism conducive to the reservoir conditions immediately.
And those pilots are in progress as we speak. So, while we are conducting these horizontal transformations, improved recovery will be also applied to lower the future decline of these wells.
TMH: Are there any updates we should know about around ESG initiatives and the collaboration with Aduro Clean Technologies? Can you dive into notable progress or developments that are happening?
David: Prospera, as mentioned, we’re reducing our environmental footprint as well as we focus on emissions or there are steps and innovation techniques to reduce carbon emissions. And Prospera has also initiated carbon capture through green technology such as bee pollination, etc., in recovering the reclamation of the land.
And we also are applying, in working with Aduro, we have provided oil samples to enhance the light ends and reduce the heavy ends to optimize the API, thereby optimizing margin.
TMH: Before we finish up here, Samuel. What are some points you can leave for investors around the future of Prospera Energy?
David: Prospera this year has been a transformational year and this incremental production will lead Prospera into total profitability.
And there are also strategic acquisitions that are in progress that will add additional barrels, nearly another 2,500 barrels, and also lead us into product mix away from heavy oil dependency into light oil and gas to diversify the product mix.
Head over to prosperaenergy.com for more detailed information. You can also find them on the Venture Exchange under the ticker symbol PEI.
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