Drilling / Well Results | IP Rates-24 Hour | Job Cuts / Downsize / Layoff

Delphi IPs Three Montney Wells; Cuts Calgary-Based Staff by 25%

Share Print Bookmark    |    Monday,March 30,2020

Delphi Energy Corp. reported an operations update on its first three wells of the 2020 capital program.

Latest Montney IP24s

First Two Wells

The first two wells of the 2020 drilling program were the 13-12-60-24W5 & 14-12-60-24W5 Montney wells. These wells were drilled from a two well pad with a surface location of 14-36-59-24W5 situated between Delphi’s two existing producers at 16-10-60-24W5 and 16-12-60-24W5.

Both wells were drilled to a total depth of approximately 6,000 metres with an extended reach horizontal lateral in the Montney of approximately 3,000 metres and were completed with a 65-stage openhole frac design comprised of a 50-stage ball drop and 15-stage plug and perforation system.

Approximately 5,200 tonnes of proppant and 30,000 cubic metres of water were pumped in each of these wells.

IP24s:

• the 13-12 well flowed on clean-up at an average rate of 3.9 mmcf/d of raw gas and 1,205 Bbls/d of 47 degree API field condensate (357 bbls/mmcf of sales gas). Total sales production rate for 13-12 over this 24 hour period was approximately 1,907 BOEPD (70 percent liquids), including an estimated plant natural gas liquids (“NGL”) yield of 41 bbls/mmcf of sales gas

• the 14-12 well flowed on clean-up at an average rate of 3.9 mmcf/d of raw gas and 1,204 bbls/d of 47 degree API field condensate (359 bbls/mmcf of sales gas). Total sales production rate for 14-12 over this 24 hour period was approximately 1,901 boe/d (70% liquids), including an estimated plant NGL yield of 41 bbls/mmcf of sales gas.

Third Well

The third Montney well of the 2020 drilling program was the 03-30-59-23W5 (“03-30”), drilled west of the existing 03/16-31-59-23W5 well. The 03-30 well was drilled to a total depth of 6,040 metres with an extended-reach horizontal lateral in the Montney of 2,824 metres and was completed with a 60-stage openhole frac design comprised of a 40-stage ball drop and 20-stage plug and perforation system.

Approximately 6,000 tonnes of proppant and 30,000 cubic metres of water were pumped in this well. The maximum pump rate on this well was 16 m3/min compared to a historical corporate average of 12 m3/min.

• The well was flowed on clean-up for approximately 100 hours, recovering approximately 15 percent of the initial load frac water. Over the last 24 hours prior to running production tubing, the well flowed on clean-up at an average rate of 2.9 mmcf/d of raw gas and 1,640 bbls/d of 45 degree API field condensate (650 bbls/mmcf of sales gas). Total sales production rate over this 24 hour period was approximately 2,165 boe/d (81% liquids), including an estimated plant NGL yield of 41 bbls/mmcf of sales gas.

Capital Cost Reductions

The average timing from spud to total depth and spud to rig release was 12.8 days and 17.2 days, respectively, for the three Montney wells mentioned above with average drilling cost of $3.4 million per well. Significant changes to the Company’s drilling practice (as further detailed in Delphi’s press release dated March 11, 2020) resulted in average drill time reductions of 14 days per well as well as estimated cost savings of $1.2 million per well when compared to Delphi’s 2019 drilling program results.

Cuts 25% of Calgary Staff

The Company has also made significant positive changes to its corporate structure and culture over the past six months, beginning with a reconstituted Board of Directors, followed by several changes to the leadership team and operations personnel.

A 25% cut in the Calgary office staff level has resulted in a material 33% reduction in salary costs. These positive changes have yielded immediate and material changes to our operating results.

Hedging

Delphi’s realized prices for condensate and NGL in 2020 are well protected by WTI crude oil swap contracts for an average volume of 1,021 barrels per day (“bbl/d”) at an average price of $82.23 per barrel (“bbl”) and Conway propane swap contracts for an average volume of 100 bbl/d at an average price of $43.23 per bbl. In addition, the Company has purchased a put option for an average of 686 bbl/d in 2020 at Cdn$78.00 per bbl and has sold a put option for an average of 686 bbl/d in 2020 at Cdn$58.00 per bbl.

The Company’s realized price for natural gas in 2020 is protected by NYMEX HH natural gas swap contracts for an average volume of 5,600 million British thermal units per day (“mmbtu/d”) at an average price of $3.54 per million British thermal units (“mmbtu”) and Chicago – NYMEX natural gas basis swap contracts for an average volume of 1,021 mmbtu/d at an average basis discount of $0.18 per mmbtu, resulting in an average swap price of $3.36 per mmbtu in Chicago.

Hedging contracts in place for 2020 protect the realized price for approximately 40 percent of Chicago natural gas sales and approximately 65 percent of field condensate and NGL sales combined, based on production in the fourth quarter of 2019.

Delphi’s commodity risk management contracts were valued at $6.3 million as at December 31, 2019. Based on the current volatility and significant drop in WTI prices, Delphi’s risk management contract value has more than tripled since December 31, 2019.