Upper and Lower Shaunavon (Sask)
This core area has over 465 Mb OOIP and in 2016, SGY drilled 24 wells which averaged in at greater than 200 boe/d at a cost of $1.1M per well. Drill time has been cut from 12.4 days to a recent six days per well with the application of horizontal monobore technology. Over time, with water floods, they estimate that the recovery factor could rise to 13% of the reserves in place from the 1% recovery rate so far. The oil has an API of 21-23 degrees and 4-10 metres of pay. SGY has over 200 wells in inventory for the Upper Shaunavon and 100 in the Lower Shaunavon formation. As crude prices recover SGY could drill 20-30 wells per year and raise production to 6,000 boe/d. At US$60/b, the upside could be 7,000 boe/d.
Valhalla (NW AB)
This core area has 150Mb OOIP of 40 degree API crude oil with a 4% recovery so far. SGY’s recent wells have been spectacular with IP rates of 2,000 boe/d and over 1,000 boe/d for 30 day IP’s. Production is from the Doig formation, and costs have been reduced to $3.2M per well. Their “type curve” estimates for 30 day IP’s are at 860 boe/d, so well performance is much better than expected. To handle the associated natural gas, they built a compressor in the north end of the pool so that the gas can be moved at all times and is not subject to shut-ins. A strategic purchase in the Sexsmith sour gas plant was made in Q4/16 adding to sour gas handling capabilities. Over time with water floods, they estimate that the recovery factor could rise to 23% of the reserves in place. SGY has an inventory of 40 net locations at 200 metre spacing in inventory. To keep production flat they need to drill 5-6 wells per year and therefore have a 10-year inventory.
Sparky (SE AB)
This oil pool has over 130 Mb OOIP of 28 degree oil. The current recovery factor is less than 15%. SGY has over 200 drilling locations. Over time with water floods they estimate that the recovery factor could rise to more than 20% of the reserves. Well costs are $1.0M, down from $2.0M per well versus a few years ago, and the recent wells have produced greater than 110 boe/d. Drill time has fallen from 8.5 days to five days in Q4/16 using the advanced technology monobore drilling. The new Alberta water flood royalty regime helps this play’s economics, with a 5% royalty for the first 9 years. Production has been raised from 470 boe/d in Q2/16, to 2,000 boe/d as of April 18, 2017 upon completing new wells. SGY has a 10-year inventory.