Blackbird Energy
Inc. (TSX-V:BBI) (“
Blackbird” or the
“
Company”) is pleased to announce test results
from its 3-27-71-7W6 Upper Montney Delineation well, expansion of
the Company’s credit facility to $20 million, estimated monthly
sales volumes and productive capacity, preliminary plans for a
development program north of the Wapiti River, and results from the
Company’s 2018 Annual and Special Meeting of Shareholders (the
“
AGM”).
“The successful testing of our 3-27-71-7W6 Upper
Montney Delineation well, including pressures and natural gas rates
that exceeded management expectations, further supporting our
geologic model that over 114 sections (72,960 acres) of our lands
are situated in the over-pressured liquids rich Montney corridor at
Pipestone/Elmworth. With the multi-interval potential of our land
now largely de-risked, and the initial capital liquidity provided
by an expanded $20 million credit facility, Blackbird is positioned
to move ahead with its development program north of the Wapiti
River. We have an expanding relationship with our lender, ATB
Financial, and on behalf of Blackbird and our shareholders, I would
like to thank ATB for their continued support.” said Garth Braun,
President, CEO and Chairman of Blackbird.
Highlights
- Upper Montney Delineation Test: Blackbird’s
3-27-71-7W6 Upper Montney Delineation well flowed at an average
estimated sales rate of 1,188 boe/d (53% liquids, liquids/gas ratio
of 190 bbls/mmcf) over the final 48 hours of an 12-day production
test. Flowing casing pressures increased steadily over the final
test period to 7,289 kPa as choke sizes were reduced to limit
natural gas production and stay within regulatory flaring
restrictions. Management is very encouraged by this short-term test
result and anticipates that liquid and natural gas rates could
improve with greater frac water load recovery from longer
production times and the installation of production tubing.
- Expanded Credit Facility: Blackbird and its
lender, ATB Financial, have agreed to increase the Company’s
revolving operating loan facility from $1.0 million to $20.0
million.
- February Sales Production: Blackbird's total
corporate February sales production averaged an estimated 2,252
boe/d (59% liquids) for the 15 days the Company was able to produce
during the month.
- Estimated Productive Capacity: Subject to the
tie-in of the 3-27-71-7W6 Upper Montney and 2-20-70-6W6 Middle
Montney Delineation wells, management estimates Blackbird’s current
unrestricted flowing productive capacity from its 10 (10.0)
operated wells to be approximately 6,000 boe/d.
- Preliminary Northern Development
Program: Blackbird expects to be able to
meet its initial 20 mmcf/d commitment at the proposed Tidewater
Midstream & Infrastructure Ltd. deep cut sour gas processing
facility located near Wembley, Alberta (the “Tidewater
Facility”) through the drilling, completion and tie-in of
five (5.0 net) additional wells north of the Wapiti River.
Upper Montney Delineation
Test
Blackbird is pleased to provide test results
from its 3-27-71-7W6 Upper Montney Delineation well, which is the
Company’s first operated delineation well north of the Wapiti River
and is approximately 14 kilometers north of Blackbird’s previous
operated development drilling. Production test results are outlined
below:
Well |
Final 48 Hour Rate of 12 Day Production
Test(1)(2)(3)(4) |
Condensate (bbl/d) |
Natural Gas (mcf/d) |
NGLs (bbl/d) |
LGR(5) (bbls/mmcf) |
Total (boe/d) |
Lateral Length (meters) |
3-27-71-7W6 (Upper Montney) |
300 |
3,337 |
334 |
190 |
1,188 |
2,200 |
1) Numbers may not add due to rounding. |
2) All disclosed production rates and volumes are
presented net of any load fluid recovery. By the end of the 12-day
production test period the well had recovered approximately 12% of
load frac water. |
3) All volumes are based on estimated sales production
data per expected deep cut recoveries through future processing at
the proposed Tidewater Facility. |
4) The final 48 hour rate does not include a period at
the end of the test where the well was highly constrained while the
Company was in the process of applying for an expanded flare
permit, which was not granted. |
5) Liquids/gas ratio (LGR) includes condensate and NGL
production. |
|
The Company cautions that short-term test rates
are not necessarily indicative of long-term well or reservoir
performance or of ultimate recovery. See "Short Term Test
Rates" below.
The 3-27-71-7W6 Upper Montney Delineation well
was drilled to a total depth of 4,604 meters with a lateral of
2,200 meters and completed over 59 intervals using the STAGE System
exclusively. Approximately 4,500 tonnes of sand was placed
representing a completion intensity of approximately 2.0 tonnes per
meter. Over the final 48 hours of production testing the well
flowed at an average estimated sales rate of 1,188 boe/d (53%
liquids, LGR of 190 bbls/mmcf) based on expected deep cut
recoveries through future processing at the proposed Tidewater
Facility. At the end of the test period the well had only recovered
approximately 12% of load frac water. Based on previous results,
management expects to see increasing condensate and liquids yields
as the well cleans up to approximately 30-40% load frac water
recovery. Flowing casing pressures increased steadily over the
final test period to 7,289 kPa as choke sizes were reduced to limit
natural gas production and stay within regulatory flaring
restrictions. Management is very encouraged by this short-term test
result and anticipates that liquid and natural gas rates could
improve with longer production times and the installation of
production tubing. The well will remain shut in until the proposed
Tidewater Facility is operational, which is currently expected to
occur in the second quarter of 2019.
Credit Facility Expanded to $20
Million
Blackbird and its lender, ATB Financial, have
agreed to increase the Company's revolving operating loan facility
from $1.0 million to $20.0 million. The terms of the facility are
otherwise unchanged. Blackbird may, at its option, elect to submit
an updated engineering report in advance of its required annual
review for the purposes of a borrowing base redetermination.
Blackbird currently has no debt, and with the expanded credit
facility has over $20 million of working capital funding available.
The Company expects to continue its conservative approach to debt,
and is currently evaluating non-dilutive options for additional
capital liquidity to complement its increased credit facility and
prepare for future development.
February Sales Production of
Approximately 2,252 boe/d (59% liquids)
Blackbird is pleased to announce that its total
corporate February sales production averaged an estimated 2,252
boe/d (59% liquids) for the 15 days the Company was able to produce
during the month. Estimated sales production averaged 1,173 boe/d
on a calendar day basis through February, with volumes being
impacted by approximately 13 days of unscheduled third party
downtime. The Company anticipates a similar level of third party
downtime impact in March, with a return to consistent operations
thereafter. The February volumes do not include approximately 5,285
barrels of condensate produced during production testing of the
Company’s 2-20-70-6W6 Middle Montney Delineation well.
Estimated Behind Pipe
Volumes
Subject to the tie-in of the 3-27-71-7W6 Upper
Montney well to the Tidewater Facility (which is anticipated for
the second quarter of 2019) and the 2-20-70-6W6 Middle Montney
Delineation well to the Company's 100% owned and operated
Pipestone/Elmworth gas processing facility (which is anticipated
for Fall 2018), management estimates Blackbird’s current
unrestricted flowing productive capacity from its 10 (10.0)
operated wells to be approximately 6,000 boe/d based on the
Company's own production test data. The Company cautions, however,
that future production and reservoir performance cannot be
predicted with certainty and may be less than estimated, and may
also be subject to factors that restrict production to a level
below an unrestricted flowing productive capacity. Blackbird is
currently subject to a take-or-pay gas handling agreement for firm
transportation and processing of sour natural gas that limits the
Company to approximately 6.0 mmcf/d of natural gas and associated
liquids. This estimate of productive capacity does not include
production from the Company’s working interest in 6 (1.4 net)
non-operated wells.
Preliminary Northern Development
Program
Based on the successful testing of the Company’s
3-27-71-7W6 Upper Montney Delineation well, which exhibited natural
gas rates and casing pressures that exceeded management
expectations, Blackbird now anticipates being able to meet its
initial 20 mmcf/d delivery commitment to the proposed Tidewater
Facility through the drilling, completion and tie-in of five (5.0
net) additional wells north of the Wapiti River. This compares to
previous internal estimates for up to 10 (10.0 net) wells required
to meet initial processing commitments.
The Company has made significant progress toward
securing a compressor site and obtaining authorization to commence
surveying right of ways for future pipelines. Blackbird has
successfully acquired 4 pad sites for near-term development, and
has identified, mapped and surveyed an additional 6 pad sites
as a part of its ongoing development planning. The Company
currently expects to commence its single-rig drilling program north
of the Wapiti River in the summer of 2018.
Results of the 2018 AGM
Blackbird is pleased to announce that all items
of business considered at the AGM held on March 7, 2018 were
approved by shareholders, including: the election of Garth Braun,
Kevin Andrus, Sean Campbell, William Macdonald, Ron Schmitz and
Burton Ahrens as directors of the Company until the next AGM; the
re-appointment of Davidson & Company LLP as the auditors of the
Company; and the annual confirmation of the Company’s incentive
stock option plan. To view an archived recording the 2018 AGM
please refer to the Blackbird website.
About BlackbirdBlackbird Energy Inc. is a highly
innovative oil and gas exploration and development company focused
on the condensate and liquids-rich Montney fairway at
Pipestone/Elmworth, near Grande Prairie, Alberta.
For more information, please view our Corporate
Presentation at www.blackbirdenergyinc.com or contact:
Blackbird Energy Inc.Garth BraunChairman, CEO,
and President(403) 500-5550gbraun@blackbirdenergyinc.com
Allan DixonManager, Business Development(403)
699-9929 Ext. 103adixon@blackbirdenergyinc.com
Advisories
Forward-Looking Statements
This news release contains certain statements
("forward-looking statements") that constitute forward-looking
information within the meaning of applicable Canadian securities
laws. Forward-looking statements relate to future results or
events, are based upon internal plans, intentions, expectations and
beliefs, and are subject to risks and uncertainties that may cause
actual results or events to differ materially from those indicated
or suggested therein. All statements other than statements of
current or historical fact constitute forward-looking
statements. Forward-looking statements are typically, but not
always, identified by words such as "anticipate", "continue",
"estimate", "expect", "intend", "may", "will", "should", "believe",
"plan", "objective", "potential" and similar or other expressions
indicating or suggesting future results or events.
Forward-looking statements are not promises of
future outcomes. There can be no assurance that the results
or events indicated or suggested by the forward-looking statements,
or the plans, intentions, expectations or beliefs contained therein
or upon which they are based, are correct or will in fact occur or
be realized (or if they do, what benefits the Company may derive
therefrom).
In particular, but without limiting the
foregoing, this news release contains forward-looking statements
pertaining to: the multi-interval potential of Blackbird's lands;
the Company's planned development program north of the Wapiti River
and timing for commencement of related drilling activities;
potential improvement of production rates from the 3-27-71-7W6
Upper Montney Delineation well with longer production times and the
installation of production tubing; expected deep cut recoveries
through future processing at the proposed Tidewater Facility; the
internally estimated unrestricted flowing productive capacity of
approximately 6,000 boe/d from the Company's 10 (10.0 net) operated
wells now tied-in or tested (subject to tie-in of the 3-27-71-7W6
Upper Montney Delineation and 2-20-70-6W6 Middle Montney
Delineation wells); anticipated timing for tie-in of the
3-27-71-7W6 Upper Montney Delineation and 2-20-70-6W6 Middle
Montney Delineation wells; anticipated timing for the Tidewater
Facility becoming operational; continuation of the Company's
conservative approach to debt levels; prospective options for
additional capital liquidity; anticipated third party downtime in
March and subsequent return to consistent operations; internal
estimates as to the number of wells needed to meet the Company's
initial 20 mmcf/d commitment to the proposed Tidewater Facility;
and anticipated timing for commencement of Blackbird's northern
development program.
With respect to the forward-looking statements
contained in this news release, Blackbird has assessed material
factors and made assumptions regarding, among other things: future
commodity prices and currency exchange rates, including consistency
of future oil, NGLs and natural gas prices with current commodity
price forecasts; the Company's continued ability to obtain
qualified staff and equipment in a timely and cost-efficient
manner; infrastructure and facility design concepts that have been
applied by the Company elsewhere in its Pipestone / Elmworth
Project may be successfully applied to the properties; the
predictability of future results based on past and current
experience; the predictability and consistency of the legislative
and regulatory regime governing royalties, taxes, environmental
matters and oil and gas operations, both provincially and
federally; the Company's ability to market production of oil, NGLs
and natural gas successfully to customers; the timing and success
of drilling and completion activities (and the extent to which the
results thereof meet expectations); the Company's future production
levels and amount of future capital investment, and their
consistency with the Company's current development plans and
budget; future capital expenditure requirements and the sufficiency
thereof to achieve the Company’s objectives; the successful
application of drilling and completion technology and processes;
the applicability of new technologies for recovery and production
of the Company's reserves and other resources, and their ability to
improve capital and operational efficiencies in the future; the
recoverability of the Company's reserves and other resources; the
Company’s ability to economically produce oil and gas from its
properties and the timing and cost to do so; the performance of
both new and existing wells; future cash flows from production;
future sources of funding for the Company's capital program; the
Company's future debt levels; geological and engineering estimates
in respect of the Company's reserves and other resources; the
accuracy of geological and geophysical data and the interpretation
thereof; the geography of the areas in which the Company conducts
exploration and development activities; the timely receipt of
required regulatory approvals;; the access, economic, regulatory
and physical limitations to which the Company may be subject from
time to time; the impact of competition on the Company; and the
Company's ability to obtain external financing when required and on
acceptable terms.
The forward-looking statements contained herein
reflect management's current views, but the assessments and
assumptions upon which they are based may prove to be incorrect.
Although Blackbird believes that its underlying assessments and
assumptions are reasonable based on currently available
information, undue reliance should not be placed on forward-looking
statements, which are inherently uncertain, depend upon the
accuracy of such assessments and assumptions, and are subject to
known and unknown risks, uncertainties and other factors, both
general and specific, many of which are beyond the Company's
control, that that may cause actual results or events to differ
materially from those indicated or suggested in the forward-looking
information and statements. Such risks, uncertainties and other
factors are discussed in the Company’s current annual information
form , annual and interim management’s discussion and analysis, and
other documents filed by it from time to time with securities
regulatory authorities in Canada, copies of which are available
electronically on SEDAR at www.sedar.com, and include, but are not
limited to: volatility in market prices and demand for oil, NGLs
and natural gas and hedging activities related thereto; general
economic, business and industry conditions; variance of the
Company's actual capital costs, operating costs and economic
returns from those anticipated; the ability to find, develop or
acquire additional reserves and the availability of the capital or
financing necessary to do so on satisfactory terms; risks related
to the exploration, development and production of oil and natural
gas reserves and resources; negative public perception of oil and
natural gas development and transportation, hydraulic fracturing
and fossil fuels; actions by governmental authorities, including
changes in government regulation, royalties and taxation; potential
legislative and regulatory changes; the rescission, or amendment to
the conditions of, groundwater licenses of the Company; management
of the Company's growth; the ability to successfully identify and
make attractive acquisitions, joint ventures or investments, or
successfully integrate future acquisitions or businesses; the
availability, cost or shortage of rigs, equipment, raw materials,
supplies or qualified personnel; adoption or modification of
climate change legislation by governments; the absence or loss of
key employees; uncertainty associated with estimates of oil, NGLs
and natural gas reserves and resources and the variance of such
estimates from actual future production; dependence upon
compressors, gathering lines, pipelines and other facilities,
certain of which the Company does not control; the ability to
satisfy obligations under the Company's firm commitment
transportation arrangements; the uncertainties related to the
Company's identified drilling locations; the high-risk nature of
successfully stimulating well productivity and drilling for and
producing oil, NGLs and natural gas; operating hazards and
uninsured risks; the possibility that the Company's drilling
activities may encounter sour gas; execution risks associated with
the Company's business plan; failure to acquire or develop
replacement reserves; the concentration of the Company's assets in
the Pipestone / Elmworth Project area; unforeseen title defects;
aboriginal claims; failure to accurately estimate abandonment and
reclamation costs; development and exploratory drilling efforts and
well operations may not be profitable or achieve the targeted
return; horizontal drilling and completion technique risks and
failure of drilling results to meet expectations for reserves or
production; limited intellectual property protection for operating
practices and dependence on employees and contractors; third-party
claims regarding the Company's right to use technology and
equipment; expiry of certain leases for the undeveloped leasehold
acreage in the near future; failure to realize the anticipated
benefits of acquisitions or dispositions; failure of properties
currently held or acquired in the future to produce as projected
and inability to accurately determine reserve and resource
potential, identify liabilities associated with acquired properties
or obtain protection from sellers against such liabilities; changes
in the application, interpretation and enforcement of applicable
laws and regulations; restrictions on drilling intended to protect
certain species of wildlife; potential conflicts of interests;
actual results differing materially from management estimates and
assumptions; seasonality of the Company's activities and the
Canadian oil and gas industry; alternatives to and changing demand
for petroleum products; extensive competition in the Company's
industry; lower oil, NGLs and natural gas prices and higher costs;
failure of 2D and 3D seismic data used by the Company to accurately
identify the presence of oil and natural gas; risks relating to
commodity price hedging instruments; terrorist attacks or armed
conflict; cyber security risks, loss of information and computer
systems; inability to dispose of non-strategic assets on attractive
terms; security deposits required under provincial liability
management programs; reassessment by taxing authorities of the
Company's prior transactions and filings; variations in foreign
exchange rates and interest rates; third-party credit risk
including risk associated with counterparties in risk management
activities related to commodity prices and foreign exchange rates;
sufficiency of insurance policies; potential litigation; variation
in future calculations of non-IFRS measures; sufficiency of
internal controls; breach of agreements by counterparties and
potential enforceability issues in contracts; impact of expansion
into new activities on risk exposure; inability of the Company to
respond quickly to competitive pressures; and the risks related to
the common shares and warrants that are publicly traded. This
list is not exhaustive.
The forward-looking statements contained in this
news release are made as of the date hereof and Blackbird assumes
no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
unless required by applicable securities laws. All
forward-looking statements herein are expressly qualified by this
advisory.
Short Term Test Rates
The Company cautions that short-term test rates
are not necessarily indicative of long-term well or reservoir
performance or of ultimate recovery. Such rates are
preliminary in nature and may not be representative of stabilized
on-stream production rates. Actual results will differ from
those realized during a short term measurement period, and the
difference may be material. Production over a longer period will
also experience natural decline rates, which can be high in the
Montney play. Short-term test rates cannot be relied upon as
providing assurance of longer term production.
Oil and Gas Measures
This news release discloses certain production
information on a barrels of oil equivalent ("boe") basis with
natural gas converted to barrels of oil equivalent using a
conversion factor of six thousand cubic feet of gas to one barrel
of oil (6:1). Condensate and other NGLs are converted to boes
at a ratio of 1 bbl:1 bbl. Boes may be misleading, particularly if
used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based
roughly on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the Company's sales point. Although the 6:1
conversion ratio is an industry accepted norm, it is not reflective
of price or market value differentials between product types. Based
on current commodity prices, the value ratio between crude oil and
natural gas is significantly different from the 6:1 energy
equivalency ratio. Accordingly, using a conversion ratio of 6 mcf:1
bbl may be misleading as an indication of value.
THE TSX VENTURE EXCHANGE INC. HAS
NEITHER APPROVED NOR DISAPPROVED THE CONTENTS OF THIS PRESS
RELEASE. Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this press release.
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