Trilogy Energy Corp. is pleased to announce that it has recently finished completion operations on the step out well Trilogy Hz Kaybob 9-10-64-19W5 (the “9-10 well”) on the western side of the Kaybob Montney oil pool, and also that it has plans to participate for its 30 percent working interest in two four well pads targeting Duvernay production.
Kaybob Montney Oil Pool Expansion
Trilogy fracture stimulated the 9-10 well on September 16, 2013. The fracture stimulation included 27 stages along the horizontal length of approximately 2,018 meters. Over the duration of the production test, the well recovered all of the completion load fluid and is currently flowing at an average oil rate of 438 Bbl/d, 0.9 MMcf/d of natural gas and 104 Bbl/d of water, at tubing pressure of 2,200 kPa. Trilogy is encouraged by these early results and believes that they support the potential that the pool extends beyond the previously identified boundaries. Additional work will be required to completely evaluate the reserves ultimately expected to be recovered from the pool and to confirm that these results support continued expansion plans.
Trilogy rig released the eastern step out well located at 16-29-63-17W5 (the “16-29 well”) on September 26, 2013, which was drilled to evaluate additional acreage on the eastern margin of the Kaybob Montney oil pool. The 16-29 well is expected to be completed and evaluated through October and November. With a successful completion, the well should be on production in the first quarter of 2014.
Duvernay Activity Update
In the third quarter of this year, Trilogy completed drilling operations on the Duvernay horizontal well located at 1-24-61-22W5 and moved the drilling rig to the next location at 13-33-57-18W5. Both of these operations were drilled to maintain Trilogy’s Duvernay land position. Following the 13-33-57-18W5 drill, the rig will move to 16-28-58-18W5 to drill a vertical well that is expected to preserve a 14 section block.
Also in the third quarter, Trilogy elected to participate for its 30 percent working interest in a four well pad operated by a third-party targeting the Duvernay formation. The average cost to drill and complete these wells, net of certain technical expenses, was approximately $12 million per well. The four lateral legs were each approximately 2,000 metres in length and were completed in approximately 100 fracture intervals in approximately 17 stages. The four wells were production tested in August at an average rate of 1,940 Boe/d per well (3.4 MMcf/d of natural gas and 1,366 Bbl/d of condensate), yielding an average condensate gas ratio of approximately 400 Bbl/MMcf. Each well was flow tested for approximately 53 hours with average flowing pressures between 13 and 24 MPa. The four well pad is expected to be tied in during September and placed on production in late October 2013. The following table summarizes some of the production test data for the four horizontal Duvernay wells. Initial production rates from these wells will differ from the production tests and will be a function of processing and compression capacity, liquids handling capabilities.
Trilogy also has plans to participate for its 30 percent working interest in a second four well pad located approximately 2 miles west of the first multi–well pad discussed above. Drilling operations have been completed and completion operations are expected to begin in early October, with first production in December. The estimated cost to drill, complete, equip and tie-in this pad is approximately $12 million per well. These two multi-well pads are located on the same joint interest land block where Trilogy and its partner drilled two wells in 2012. These two wells were brought on production in August 2013, producing for approximately 28 days before being shut in due to maintenance work at the Keyera Simonette gas plant. The two joint wells were flowing at restricted condensate (48-54 degree API) rates of approximately 500 Bbl/d each, with associated gas production. It is anticipated that these wells will be back on production when the maintenance work at the Simonette plant is completed at the end of September.
Trilogy has approximately 125 net sections of prospective lands in the volatile oil area and 75 net sections of land in what Trilogy interprets to be the gas condensate area of the play. With the additional capital spending related to this Duvernay activity and costs associated with previously unbudgeted activity, Trilogy will be reviewing its capital expenditure plans for the balance of the year and providing further guidance when its operating and financial results are released in November.
Through the month of September, Trilogy’s production has been impacted by various plant outages in the Kaybob and Grande Prairie areas, including the Trilogy operated Kaybob North Gas Plant which processes a large portion of Trilogy’s production. Trilogy had contingency plans to redirect the impacted production to the SemCAMS K3 Plant, however an unexpected plant outage at that plant necessitated those volumes being curtailed through September. These plant outages will reduce third quarter volumes to approximately 31,000 Boe/d. We expect the Company will resume normal production levels in the fourth quarter. The additional capital projects described above will not have a significant impact on the average annual production rate, as the new wells are expected to come on production late in the current year; however these additional wells are expected to increase the exit rate for the year.With lower natural gas prices forecasted for the balance of the year, Trilogy has continued to allocate capital towards oil and condensate rich gas projects, which are expected to increase the oil and natural gas liquids component of the Company’s production to approximately 50 percent at year-end.
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