Greenfire Resources Ltd. ("Greenfire" or the "Company"), a Calgary-based energy company focused on the production and development of thermal energy resources from the Athabasca region of Alberta, Canada, is pleased to announce the Company's future growth plans, which represent significant potential value for shareholders.
Highlights of the Company's Future Growth Plans include:
Implementation of a modernized SAGD drilling strategy, including drilling extended reach and curved SAGD wells to support higher production, incremental reservoir access and bitumen recovery rates, as well as scalable cost efficiencies, including reduced future well counts, pads and infrastructure requirements
Consolidation of multiple well pads into a single concentrated Super Pad design, including centralized infrastructure, with expectation of increasing production while minimalizing surface and well costs
In addition to utilizing the existing capacity at the Expansion Asset of 26,300 bbls/d (35,000 bbls/d, 100% working interest), a potential brownfield expansion of the existing central processing facility is planned to potentially add 11,300 bbls/d (15,000 bbls/d, 100% working interest) of capacity growth
Recently acquired SAGD central processing facility to potentially be relocated and commissioned at the Expansion Asset at a cost that is anticipated to be significantly lower than new central processing facility construction. If relocated, the facility would be expected to add 11,300 bbls/d (15,000 bbls/d, 100% working interest) of additional production capacity
Increase production capacity at the Demo Asset by 2,500 bbls/d to 10,000 bbls/d by re-starting the existing processing train at Plant 1
These initiatives are expected to allow Greenfire to increase production capacity to approximately 58,800 bbls/d (75,000 bbls/d, 100% working interest), a 74% increase to net production capacity.
Greenfire's plans to utilize existing plant capacity and install additional capacity are anticipated to result in cost structure improvements and increased free cash flow generation potential
These future growth plans, some of which remain under development and are subject to board approval and funding commitment, are anticipated to represent significant incremental value for Greenfire shareholders. The Company plans to release an updated independent reserves report in the fourth quarter of 2024, which is expected to incorporate the performance of Greenfire's 2024 operational initiatives and an updated development plan.
Greenfire is a Significantly Undervalued Pure Play Thermal Oil Sands Investment Opportunity:
Greenfire, MEG Energy Corp., Athabasca Oil Corporation and Connacher Oil and Gas Limited are the only remaining pure-play thermal businesses, benefitting from low sustaining capex and greater free cash flow generation per unit of production, which are supportive of significant long-term shareholder returns
Greenfire is currently trading at a significant discount relative to other pure-play mid-cap oil sands companies on a Price / Reserve Evaluator net asset value basis
Additional Details on Greenfire's Future Production Growth Plans:
Modernized Drilling Strategy:
Drilling Modern SAGD Wells - Greenfire's operational and technical team have successfully executed modern drilling practices and SAGD technologies, including successfully drilling extended reach and curved SAGD wells since the Company began its drilling campaign in August 2023. Greenfire has drilled one curved SAGD well pair and one curved SAGD producer at the Demo Asset during August and September 2024, to maximize reservoir access and support increased recoveries. Extended reach and curved SAGD wells are expected to support higher production, incremental bitumen recovery and scalable cost efficiencies, including reduced future well counts, pads and infrastructure requirements.
Updated Development Plan - The Company plans to consolidate multiple well pads into a single concentrated pad design (the "Super Pad"), including centralized infrastructure. The first Super Pad will be located immediately next to the central processing facility at the Expansion Asset and will exploit thick Tier-1 pay with extended reach and curved SAGD wells to maximize reservoir access, while further minimizing surface and well costs owing to increased operational scale. Greenfire has submitted the requisite regulatory applications for this Super Pad and anticipates regulatory approval by year end 2024.
Expansion Asset (75% Working Interest, Operator):
Installed Plant Capacity of 35,000 bbls/d (100% working interest) - Greenfire intends to fully utilize existing plant capacity by drilling Refill wells and commissioning a nearby Super Pad of sustaining wells. The existing plant is capable of producing 35,000 bbls/d and has produced as high as ~32,000 bbls/d under the prior operator. No additional steam generation capacity is contemplated to utilize the 35,000 bbls/d of existing production capacity.
Brownfield Expansion to 50,000 bbls/d (100% working interest) - Greenfire has the opportunity to undertake a brownfield expansion of the central processing facility to add up to 15,000 bbls/d of additional production capacity, by adding new standard SAGD components. The Expansion Asset is designed for the addition of one processing train and two steam generators at relatively low capital intensities relative to the construction of a new central processing facility.
Relocation of the McKay SAGD Facility for an Additional 15,000 bbls/d (100% working interest) - The Company recently acquired the McKay SAGD facility at a cost of $1.2 million in Q2 2024. The McKay facility was designed with a high degree of modularization, including the ability to relocate the facility. As a result, Greenfire has the opportunity to relocate the McKay central processing facility to the Expansion Asset, which is expected to add 15,000 bbls/d of production capacity and power co-generation capability. The cost of moving and commissioning the McKay SAGD facility at Expansion is anticipated to be significantly lower than the construction of a new central processing facility.
Demo Asset (100% Working Interest, Operator):
Restarting Portion of Existing Plant for Capacity of 10,000 bbls/d - Greenfire has plans to increase production capacity at the Demo Asset by 2,500 bbl/d to 10,000 bbls/d by re-starting the processing train at Plant 1. Incremental production capacity is expected to utilize existing steam and blend processing equipment, with no material additional infrastructure capital anticipated to be required. Three new extended reach Refills have been drilled in the first half of 2024 at the Demo Asset and are in warm-up phase, with an additional 10 Refill locations planned.
Greenfire's Modernized Drilling Strategy, Updated Development Plan and Latest Drilling Results to be incorporated into the Year-End 2024 Reserves Report
Greenfire intends to incorporate the modernized drilling strategy outlined above, updated development plan and expansion of evaluated lands and geology into the updated reserves report for year-end, which is planned to be prepared by the Company's independent qualified reserves evaluator.
Greenfire's Future Growth Plans Support Strategy for Shareholder Value Creation
Greenfire has a large, long-life and relatively low decline Tier-1 oil sands resource base, with two producing and adjacent SAGD assets at the Hangingstone Facilities and expandable pipeline infrastructure in place for diluted bitumen and diluent at the Expansion Asset. At the Hangingstone Facilities, the Company's structural cost advantages from its Tier-1 SAGD reservoir and relatively modest capital expenditure profile, given significant underutilized capacity in place, is anticipated to support approximately 33,800 bbl/d (42,500 bbl/d, 100% working interest) of production capacity and meaningful potential free cash flow generation.
To support additional operational scale, the Company has plans to increase production capacity to approximately 58,800 bbls/d (75,000 bbls/d, 100% working interest), a 74% increase to net production capacity. These planned initiatives are expected to allow for further cost structure improvements and increased free cash flow generation potential, which combined with relatively low sustaining capital requirements, can support significant long-term shareholder return programs.
