A WORLD-CLASS ASSETDELPHI’S
OPERATIONS

Delphi’s core area is in the liquids-rich region of Bigstone, uniquely positioned in the Deep Basin of northwest Alberta. Although the Deep Basin has a vast amount of production from different areas, economic performance varies dramatically. Careful selection of operational areas with strong economic performance is crucial for enabling companies to thrive during periods of low hydrocarbon pricing.

Delphi identified the greater Bigstone area as a top performing area and has concentrated our efforts on making it more cost effective in high condensate producing areas. At Bigstone, large pay columns and liquids-rich gas are combined with modern drilling and completion techniques to deliver top decile results. Proprietary upstream infrastructure and nearby downstream pipelines bring our hydrocarbons to markets across North America. With large areas and zones still undeveloped, Bigstone is destined to remain a top performing area for years to come.

The two main producing zones at Bigstone are the Montney and the Cretaceous. Both zones remain economic today even in a time of prolonged low commodity pricing. Delphi remains the largest landowner at Bigstone with a large undeveloped land position in both the Montney and the Cretaceous, which supports future accelerated growth for years to come.

bigstone montney

Bigstone Montney

The Montney formation is now recognized as one of the world’s greatest deposits of hydrocarbons. It covers vast distances and many areas are now exploited with horizontal drilling combined with hydraulic fracturing. As the database of Montney production expands, a divergence between higher and lower economic value areas becomes apparent. To be a top tier producer, you have to operate in areas with top tier values. Delphi’s Bigstone Montney has the combination of high deliverability, high liquid ratios and easy access to markets that make it a high value area.

Delphi’s planned Bigstone Montney drilling program in 2017 will more than double as compared to the 2016 program with the addition of a second drilling rig that commenced activity in December 2016. The 2017 development plan contemplates the drilling of 13 gross (8.4 net) Bigstone Montney horizontal wells and the completion, tie-in and well site equipping of 14 gross (9.0 net) wells. It is anticipated that the 2017 development plan will grow production by year-end 2017 to approximately 11,500 barrels of oil equivalent per day (“boe”), an anticipated growth increase of 61 percent over 2016. In 2016, the Company continued the trend of reducing drill and completion costs for its horizontal Montney wells at Bigstone reporting a Company record low gross average of $7.5 million per well compared to $8.1 million per well in 2015, and $10.4 million in 2014.

The Company continues to innovate our field operations significantly improving well results. Well stimulation design innovations continue to enhance well productivities, field condensate yields and well economics. Continued Bigstone Montney drilling to the west is resulting in ultra-rich field condensate yields. Field condensate yields in the most recent wells have increased two to four times compared to the average yields realized from the Company’s previous wells. Increased condensate yields of this magnitude on new wells, combined with higher forecast condensate prices in 2017 have the compound result of doubling revenue per barrel of oil equivalent and increasing unhedged field operating netbacks per barrel of oil equivalent by as much as three times compared to 2016 netbacks.

Delphi has secured the required firm service transportation for 100 percent of forecasted 2017 natural gas production growth. The contracted Alliance full path service to Chicago with its incremental priority interruptible service, together with the existing and incremental 2018 contracted firm TCPL service, will provide the Company with sufficient firm service to handle accelerated growth plans beyond 2017. Delphi’s Bigstone Montney field compression and dehydration facilities are also sufficient for the forecasted growth in 2017.

To handle the Company’s growing production volumes beyond 2017, Delphi is working to efficiently expand its existing Montney field dehydration and compression capacity at East and South Bigstone. Through this effort, Delphi has secured a 20 million cubic feet per day amine processing equipment package to sweeten a portion of the Montney production for processing at an under-utilized Partner operated Bigstone sweet gas plant located at 14-28-59-22W5, where the Company owns a 25 percent working interest.

With an attractive mix of lower operating costs and a high value product stream, concentrating on Bigstone Montney was a natural decision for Delphi. Finding and development costs, including changes in future development costs, were $10.17 per barrel of oil equivalent for proved producing Montney reserves compared to the 2014-16 three year average of $12.40 per boe.

bigstone cretaceous

Bigstone Cretaceous

The Bigstone property is located 150 kilometres southeast of the city of Grande Prairie. The sweet natural gas production from the shallower Cretaceous zones at Bigstone are now the Company’s second largest producing asset, contributing an average in 2016 of 1,044 barrels of oil equivalent per day, with 16 percent as oil and natural gas liquids. Important infrastructure ownership in the area for this production includes Delphi’s 26 percent working interest in the Bigstone West gas plant, with a gross capacity of 85 million cubic feet per day (“mmcf/d”).

A major expansion of the Company’s Bigstone Cretaceous assets occurred with the purchase of the Negus property in 2014. Delphi acquired over 40 kilometres of field gathering infrastructure as well as a 100 percent working interest in a 15 mmcf/d sweet shallow cut natural gas processing plant.

Going forward, Delphi will intensify our Bigstone Cretaceous development. An initial target will be the Gething channel system. These stacked channels can recover over 12 billion cubic feet of natural gas from vertical wells in the area, but many vertical wells underperform due to the low permeability reservoir and reservoir compartmentalization.

By utilizing modern methods of horizontal drilling and hydraulic fracturing, and applying lessons learned from our continued innovative Montney field operations, Delphi can access the lower permeability reservoir and connect these compartments, giving the Company’s wells higher recovery volumes and higher deliverability.