Delphi Energy adds 22.5 sections in the greater Bigstone area

Calgary-based Delphi Energy (ticker: DEE) announced the acquisition of 22.5 sections of Monteny assets contiguous to its current land holdings as the company looks to continue expanding in the region.

The assets, which are in the southern end of the play, bring Delphi’s total holdings to 165.5 gross (109.6 net) sections in the play with only eight sections fully developed, according to the company.

Delphi Energy Bigstone map

Condensate, natural gas liquids driving production increases

For the first quarter of the year, Delphi reported production from the Bigstone Montney increased 14% sequentially to 7.1 MBOEPD as a result of a 33% (733 barrels per day) increase in field condensate and NGL production, according to the company’s Q1 earnings release. Montney field condensate and NGL yields increased to 130 barrels per MMcf in the first quarter compared to 99 barrels/MMcf in the fourth quarter of 2016.

In the company’s investor presentation, Delphi includes two type curves to demonstrate the economics of the Montney, one of which is a “rich type well” with a 108% IRR at January 9, 2017, strip pricing, according to the company. The company’s other type curve also has strong economics (79% IRR with the same assumptions), but Delphi believes that wells on its newly acquired land will trend toward the rich side, Delphi President and CEO David Reid told Oil & Gas 360®.

“There are existing vertical wells [on the newly acquired acreage], so we have pretty good log data,” Reid said. “We are still getting a handle on how liquids-rich it’s going to be, but we believe it’s going to be closer to the [rich type well] curve.”

Delphi Montney economics models

Delphi will drill previous assets through 2017

For the remainder of this year, Delphi plans to continue drilling on assets it held before the acquisition in early May, Reid said. The company has a two rig drilling program set with the intention to drill six to eight wells in the first half of the year. Five to six of those will be funded through a joint venture with the remainder funded through cash flow, according to the company’s presentation.

The company will start moving west of its previously drilled wells where the Montney’s thickness increases throughout the remainder of the year. Reid said the company could start to drill on the newly acquired assets in 2018.

Delphi Energy 2017 drilling program

Multiple benches of the Montney out-TCF the Marcellus

The Montney formation’s marketable, unconventional petroleum potential was evaluated for the first time in a joint assessment by the National Energy Board, the British Columbia Oil and Gas Commission, the Alberta Energy Regulator, and the British Columbia Ministry of Natural Gas Development.

NEB reserves report showing the Montney has more gas in place than the MarcellusThe Montney play has six intervals per section where DEE operates, according to the company, and its approximately 449 trillion cubic feet (Tcf) of natural gas reserves make it about 10% larger than the Marcellus.

The goal with the acquisition was to continue expanding the company’s footprint in the area, Reid told Oil & Gas 360®, something it will continue to do during the course of 2017 as well.

“We are looking to expand inventory, that was really the driver behind this acquisition,” he said. “We continue to consolidate land, and we believe there are some more industry players in the area that are open to deals.”

The company plans to drill 13 gross (8.4 net) Bigstone Montney horizontal wells over the course of 2017 while completing and tying-in 14 gross (9.0 net) wells.


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