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.