UGR Montney Presentation CAPP Scotiabank Investment Symposium Toronto April 8, 2015 Confidential and Proprietary 1
Introduction UGR was founded in 2007 to pursue unconventional oil & gas Principals opportunities in the U.S. and Canada o Mike Gatens - CEO Canada 35 yrs experience o Acquired first Montney lands in 2007 BS & MS Petroleum Engineering…
Executive Summary Focused on the North Montney Divested Texas and Alberta assets in 2014 70,000 net acres, 24 Tcf resource in best part of Montney play 10+ Tcf recoverable, 1,500+ locations Value is Dominated by Montney Asset…
Corporate Asset Summary +/- 60 MMcfe/D net production 24 Tcfe of Montney gas-in-place 10 Tcfe recoverable (UGR estimate) 1.8 Tcfe proved + probable reserves 5.2 Tcfe of booked contingent resource CA1.4 billion PV10 (12/31/2013) +…
Montney Overview Confidential and Proprietary 5
Montney is a World-Class Play Over 4,200 Tcf and 140 billion bbl oil in place From Canadian National Energy Board (NEB) UGR Lands Greater than the Marcellus and Eagle Ford combined 449 Tcf gas recoverable 14.5 billion bbl NGLs…
Geology Review Montney Deposition Montney Formation Extends over a large area of Alberta and BC encompassing approximately 50,000 square miles Early Triassic in age (245 million yrs ago) Formed on the edge of the continent Oceans…
Montney Began as a Conventional Play Three main types of deposits in the Montney Shoreline and shelf deposits comprising sandstones, siltstones and coquinas, with conventional high permeability oil and gas reservoirs exploited in the…
Montney is a THICK Formation Courtesy of Progress Energy 300 m thick formation = 3+ stacked plays OGIP = 270+ Bcf/GSU vs. 160 Bcf/GSU for Eagle Ford Confidential and Proprietary 9
Montney Production is Ramping Up Over 3.2 Bcfe/D in BC, 1.1 Bcfe/D in North Montney in January 2015 Confidential and Proprietary 10
Montney Wells Have Shallow Decline Rates Why shallow Montney decline rates Montney is not a shale Probably due to enhanced Recent UGR Town Wells permeability due to natural fracturing in low-porosity areas Production Curves…
Montney Industry Trends Drilling Completions Surface casing setting depth reduced from 2,000 Open hole ball drop emerging as preferred to plug feet to 1,000 feet & perf Saves about 100,000/well Saves 500,000/well Drill & set…
Completion Technology is Evolving Costs coming down, wells getting better Lower 2015 costs Multi-Well Pads 4 to 8 wells/section/layer 12 to 32 wells/pad Frac Design Optimization Ongoing 1,400 m to 3,000 m laterals Plug & perf…
Competitive Insights (for American audience) Ownership Stakeholder Topics Provinces own the vast majority of mineral rights The First Nations tribes have certain rights and must be Leases obtained through monthly sealed-bid auctions…
BC Montney M&A Activity BC Montney 2010 2013 British Columbia Montney M&A Activity 8 acquisitions: 8.1 billion 2,000 - 34,000 per acre (avg. 8,200) Some with production, some without At a discount to JVs 5 JVs: 6.5 billion…
BC LNG Update 16 LNG export projects proposed, 6 by majors with experience, 2 by credible small players; 6 new pipelines proposed Over 35 Bcf/D if all constructed, 2 x historic Canadian production Proposed Western Canadian LNG Plants…
UGR Montney Assets Confidential and Proprietary 17
UGR Lands are in the Heart of the North Montney Fairway UGR has 70,000 net acres, most with a 100% The North Montney was initially drilled in 2009 and working interest had 28 rigs running in the local UGR area (Progress was running…
UGR Acreage is in a Large Sweet Spot Best Month of Production (BC Montney) Best Month of Production (North Montney) Alberta Border UGR lands Confidential and Proprietary 19
The North Montney Has Thick Quality Acreage High-Graded Pay Thickness (BC Montney) Gas-In-Place per Square Mile (North Montney) Confidential and Proprietary 20
Montney Type Logs Four stratigraphic zones can be mapped over UGR lands and beyond Three completion zones, all tested vertically and horizontal Water saturation averages 25% with no free water Average gas-filled porosity 4.1%…
UGR Acreage has Good Wells In All Three Montney Zones North Montney Well Quality and Completion Zone Good wells in all three zones Over-pressured (0.5 to 0.65 psi/ft; 11.3 to 14.7 kPa/m) Dry gas wells are deeper, higher pressure,…
UGR Wells are Better Than Play Average, Revisions are Usually Upwards UGR Wells are Significantly Better than the Play Average Two of the top ten wells in the BC Montney Unconventional play are on UGR lands (based on 6-month…
Type Curve Development Newer UGR Wells: Better than Older Wells, Completions Evolving UGR forecasts individual wells and rolls up to an average Means no loss of well count in averaging, regardless of well age Forced 6% terminal…
Increasing Access to Markets Regional Pipe and Takeaway Capacity North Montney Existing and Planned Pipelines The UGR lands sit on an existing 1.8 Bcf/D pipeline (Spectra T-North) Fully contracted, but 700 MMcf/D underutilized UGR…
Firm Transportation & Processing Commitments Spectra T-North Ft. Nelson Line (Gas) Plausible that interruptible volumes will end by 2016 We want to ensure we can get gas to Station 2 Interconnects with TCPL do exist, so Station 2…
UGR Montney Reserves Growth Prior to 2014, UGR focus was on growing reserves Roughly 67% of UGRs locations have been booked as either Reserves or Contingent Resource GLJ increased OGIP and type curves Gas price forecast is lower than…
Local Area Highlights Beg area now includes numerous very good offsets Upper, Middle & Lower Montney Progress and Black Swan wells Best Month of 7-9 MMcf/D Black Swan is planning an 80 MMcf/D liquids plant for their wells Town…
Jedney Pad Jedney Pad (C-54-J) One vertical and three Lower Montney hz wells Condensate stabilizer, sand filters, wet meters, group & test separator, dehy Two hz wells flowing to sales at 3 5 MMcf/D Initial wells into new…
Town, Daiber & Kobes Pads Town 2 Pad (D-69-B) One Vertical and four hz wells (1 UM, 3 LM) Sand filters, wet meters, group and test separators Gas flows to 25 MMcf/D Kanata dew point plant Gas sales initiated early January 2015…
Montney & UGR Completion Designs are Evolving Recent Open Hole Ball-Drop Completion Designs that have Created 10+ MMcf/D Wells Recent Per Stage Per Well Lateral Completion Fluid Sand Typical Fluid Sand Length 3 3 Designs Hardware…
Upper Montney Production Performance Newest wells are best wells Ball drop completion technique Dont place lateral in phosphate New wells 2X older wells, but need a few more months to confirm UGR imposing a 10 Bcf/well cap…
Lower Montney Production Performance Newest wells are better than older wells on average Ball drop completion technique New wells 1.3X older wells, but need a few more months to confirm UGR imposing 10 Bcf/well cap on only a…
Montney Type Curves are Improving New type curves have substantially higher early rates than old type curves The Upper Montney is 2X the old type curve for the first several years New type curves have materially higher EURs…
Single-Well Economics Confidential and Proprietary 35
Water Management Frac water is sourced from lakes, rivers and private land owners Lined pits can be used, but the common practice is to use large above ground storage tanks (C-Rings) that hold 40,000 bbls of water C-Rings Cannot…
Production Equipment Typical Montney Well Surface Equipment on Lease Sand filter/separator Three phase separator Flare stack Wet meter Water and condensate storage Dehydration Sales meter Confidential and Proprietary 37
Added Processing Capacity in 2014 Most of our gas flows into the Spectra T-North line which only accepts sweet dry gas with a hydrocarbon dew point of -9 degrees centigrade or lower, thus most of our acreage will require some processing…
UGR Corporate Production Confidential and Proprietary 39
Forward Plan Confidential and Proprietary 40
2015 Plan Targets Southern Core Area (Town) Southern core has access to pipeline capacity T-North runs under UGR acreage and has capacity Dry gas or dew-point control = fewest facilities Pads scouted or built Jedney has limited…
UGR Drilling Schedule Scenario A (One Rig) UGR Blair Creek One Rig Plan - Recommended Plan Drill Timing 2015 2016 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Kobes Kobes Daiber…
UGR Production Forecast Scenario A Confidential and Proprietary 43
Risks & Uncertainties Things we cant control Gas price, LNG FIDs, service access/costs Willing & able buyers/partners Market opinion of UGR value Public opposition, First Nations, regulatory policy Things we can control Pace of…
Proposing Capital Program in 2015 Increased borrowing base Drilled 2 remaining Kobes wells in Q1 Drill 8 net wells with 1-rig plan Participate in facility expansion with Kanata to 100 MMcf/D by Q1 2016 Divest mid-stream facilities…
Exit Strategy Confidential and Proprietary 46
Competitor Lands & Synergies Marketing strategy is influenced by offset activity Competitor drilling activity aids in acreage assessment Long-term midstream solutions in Beg & Jedney will likely involve offset operators Exit…
Exit Options Maintain contact with potential LNG or value-added developers that need additional gas supply Possible sale or JV Merge or amalgamate with strategic neighbors Existing public company Other private company(s) before…
UGR Drill-Out Potential U.S Investor Model Drill-Out Plans for 1,500 Wells Are Being Developed Ramp to 10 rigs = 1 Bcfe/D by 2022, can hold flat for 10 years Drill-Out Cash Flow Self-Funding by year 3 without using debt 550 million…
Questions Confidential and Proprietary 50
Appendix Confidential and Proprietary 51
Gas Price Forecasts Confidential and Proprietary 52
Operating Cost Summaries All UGR Montney PPY Altagas Area PRQ Daiber D-60-C Pad Confidential and Proprietary 53
Operating Cost Summaries PPY Town D-44 Pad PRQ Kobes A-10-J Pad PRQ McMahon Area Confidential and Proprietary 54
Loading...
