New Completion Technology Can Cut Downtime to 20 Minutes Between Frac Stages

On July 28, Blackbird Energy (ticker: BBI) announced that it has entered into an agreement to acquire an indirect 10% minority interest in Stage Completions Inc. for C$3 million.

Stage Completions is a privately held Canadian well technology and services company that has developed a patented sliding sleeve completion system that utilizes a pump down collet to open the sleeves. The Stage completion system does not require a coil tubing unit and allows for greater pumping rates, reduced friction and reduced time on surface, according to Blackbird.

Stage Completions has published a case study based on its use of the technology on a Blackbird injection well in which six stages for the water disposal well were pumped and completed with a 100% success rate. The case study highlighted results: “The system’s behavior during the job was similar to that of a ball drop system in the sense that an operator can clearly see when a collet engages its specific profile, a pressure build to shear the lock-in pins and the subsequent shifting of the valves to commence the frac job.”

Blackbird Energy Makes $3 Million Technology Investment to Secure Reduced Montney Completion Costs

Blackbird Energy is using a new well completion technology from Stage Completions that can cut downtime to 20 minutes between frac stages.

20 Minutes Between Stages

Blackbird said that its last standard well completion took approximately 1 hour and 40 minutes between stages. With the Stage system, the company believes it will be able to move from stage to stage in as little as 20 minutes pumping similar volumes.

Based on development well data in the Montney from Seven Generations Energy Ltd. (ticker: VII), Seven Generations’ 2015 average stage spacing was 100 – 107 meters (28 stages per 2800m – 3000m well).  On this size of well, the company believes the time savings, just from reduced down time, could save 37 hours, or a day and a half.  Seven Generations, like many other operators across North American unconventional plays, is testing increased frac density and is now talking about 80 meter stage spacing (35 – 38 stages per 2800m – 3000m well) in 2016.

The Stage Completions system also employs a dissolvable alloy ball / plug that begins to dissolve after 8 hours so that no plugs require mill-out post completion, eliminating the need for a coil tubing unit.

Blackbird Energy Makes $3 Million Technology Investment to Secure Reduced Montney Completion Costs

Source: Seven Generations Energy Ltd. June 2016 corporate presentation

The dissolvable ball and collet-activated fracturing sliding sleeve systems are designed to work in both cased hole and open hole applications. Also, the company said that the system can handle more than 100 stages, and it has the ability for a new ball and collet to be reinstalled at a later date for re-frac and re-stimulation of a well.

The sliding sleeve system has a constant ID (internal diameter) which allows for more efficient pumping throughout the wellbore, reduced friction, reduced pumping times and more efficient flowback, according to the company.

Preferential Pricing and Access for Blackbird and its Shareholders

As a part of the transaction, Blackbird has secured a preferential price and access to the product in perpetuity. Blackbird will obtain Stage’s systems for cost plus an administration fee, giving Blackbird a clear competitive advantage on completion costs. Blackbird believes it can achieve cost savings of between $1.5 and $2.0 million per Montney well compared to competing sliding sleeve and plug and perf technologies.  Blackbird believes that if these cost savings are realized, the $3 million investment will pay out in less than two wells.

Garth Braun, Chairman, CEO and President of Blackbird, told Oil &Gas 360®, “I personally was an early investor in Stage Completions and I am a director of the company today.  As I saw how industry has begun to adopt the new technology and how it successfully worked for our own account at Blackbird, I felt that it was important to secure preferential access and pricing for Blackbird.  We have always prided ourselves on being a highly innovative company, and as a smaller player today, it is imperative that we find ways to compete.  With this small investment, we now have the buying power of a super major with a junior company budget.”

“The deal structure was also really important to me,” Braun said. “We wanted only a minority interest to secure the preferential terms for Blackbird. We are not committed for any future capital calls or restricted from other technologies that might come along. This stake, allows our team at Blackbird to focuses on our operations.  As a junior, growth is the name of the game and the most important thing we do every day as an E&P company is allocate capital efficiently across our asset base to facilitate economic growth.”

Blackbird is funding the transaction through cash on hand and will hold approximately $28.5 million in working capital with no debt post-closing of the transaction.

Blackbird at EnerCom’s The Oil & Gas Conference®

Blackbird Energy will present at the EnerCom conference in Denver on Tuesday, August 16, 2016. To register for The Oil & Gas Conference® visit the conference website.

Blackbird’s CEO Garth Braun was featured in a video interview with Oil & Gas 360 at the 2015 EnerCom conference.

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