Exploration & Production | Deals - Joint Ventures | Production Rates | Drilling Program

Perpetual Energy Drilling 6 net Wells in 2014 Remainder

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Perpetual Energy Inc. has announced an operational update for East and West Edson Operations.

East Edson Operations Update

Since closing the East Edson joint venture in July 2014, Perpetual has been actively executing its planned drilling program, primarily drawing on the $70 million of farm-in funds established in the joint venture partner escrow account. Nine wells have been rig released thus far, with seven (7.0 net) horizontal wells drilled within the Northeast development area and two (2.0 net) wells terminating within the Southwest development area as defined by McDaniel and Associates Consultants Ltd. in the updated reserve report for the East Edson area dated July 14, 2014.



Thus far, four of the nine wells have been completed and tied in through the existing compressor station, two of which have been flowing through the Rosevear gas plant since August. Both of these new wells are producing significantly above their respective type curves at IP rates of over 10 MMcf/d plus associated natural gas liquids, as depicted in the production plot. The additional two completed wells are currently beginning initial flow back, clean up and testing operations. Completion, frac and testing operations are to be performed in the remaining five standing wells prior to year end.

 

Operations are on track for 6 gross (6.0 net) additional wells to be drilled prior to year end with three drilling rigs currently active. Two (2.0 net) wells will be drilled within the same Northeast development area on previously drilled pads. Four (4.0 net) wells are scheduled within the Southwest development area as defined by McDaniel. Perpetual estimates the majority of the $70 million of joint venture partner escrow funds will be spent in the second half of 2014 on drilling, completion and tie-in operations as well as seismic activities related to the East Edson joint venture commitments.

Including the start-up of the first two new wells, production at East Edson is currently averaging over 25 MMcf/d, plus associated liquids estimated at approximately 20 to 25 bbl per MMcf. As part of the joint venture, a gross overriding royalty of 5.6 MMcf/d, plus associated liquids, is payable to the joint venture partner on a monthly basis.

Perpetual has advised that all required regulatory approvals for the new East Edson gas plant at 10-3-52-17W5 have been received and site preparation operations have commenced. Perpetual committed to construct the new 30 MMcf/d gas plant prior to September 2015 as part of the joint venture arrangement. All equipment has been ordered and construction costs are expected to be on budget, incorporating an enhanced design for the refrigeration plant and several pipeline components to accommodate 60 MMcf/d to facilitate future expansion. Lease construction for the gas plant will begin as planned during the fourth quarter of 2014.

West Edson Operational Update

Drilling operations have been extremely active at West Edson post spring break-up. Since the end of the second quarter nine gross (3.6 net) wells have been drilled at West Edson. Six wells (3.0 net) were completed, tested and tied-in during the third quarter, including the 16-2-51-18W5 well drilled in the second quarter.

Early production from each of the six wells has met or exceeded the West Edson type curve, including three wells (1.5 net) which targeted areas of potential reservoir pressure depletion to help assess the optimal spacing and development plan for the Wilrich resource at West Edson. Completion and tie-in operations are currently in progress for the remaining two (1.0 net) operated standing wells to maintain high heat content gas sales production at full capacity at current average levels of 63.5 MMcf/d (31.75 MMcf/d net), plus associated C5+, for the remainder of 2014. Drilling operations will also resume prior to year end.