Bigstone Bump: Celtic Exploration Doubles P+P Oil Reserves in 2011
An update to the company’s reserve totals were quite positive for Celtic Exploration Ltd. (TSX:CLT), which more than doubled its proved plus probable oil reserves in 2011 from the previous year. In a press release put out today, the company announced that it had proved plus probable reserves of 139 million barrels of oil equivalent, up from an estimated 67.5 million BOE in 2010. This news isn’t surprising as it comes after Celtic put up record production numbers to close out 2011 with 24,929 BOE per day.
Up 48 percent from the $930.7 million net present value at the end of 2010, Celtic's NPV of proved plus probable reserves at Dec. 31, 2011, discounted at 10 per cent before tax, was $1.38 billion. This higher valuation is due to the significant growth in reserves, despite lower forecasted natural gas prices.
The proved plus probable gas reserves totaled almost 637,000 million cubic feet at the end of 2011, up from 304,000 million cubic feet, while the weighting of these reserves was 24 per cent oil and 76 per cent gas volume wise and 44 per cent oil and 56 per cent gas based on revenue.
An area that Celtic is exploring is the Bigstone area of the Montney Formation, which is showing signs of being particularly liquid heavy, compared to the primarily dry gas nature of the Montney. In one of the most expensive land sale regions of Alberta, the Bigstone is one of the plays that Celtic is leading the way in, along with other players like Delphi Energy (TSX:DEE), Trilogy Energy (TSX:TET) and a partnership between Donnybrook Energy (TSX-V:DEI), Pennant Energy (TSX-V:PEN) and BlackBird Energy (TSX-V:BBI).
On the Bigstone, Celtic Energy drilled a well located at 12-33-059-22W5 with a horizontal lateral of 2,979 metres in length within the Triassic Montney formation with results due in the near future. If the expansion of Celtic’s processing capacity at its K3 Gas plant to 30 mmcf/d and 1,250 bbls/d in condensate are any indication, even larger numbers coming from the region could be accommodated soon.
Celtic’s neighbours have also put up enticing numbers, with Delphi leading the way with its 1-19-60-22W5M well, successfully completed and flow tested at an average rate of 12.5 million cubic feet per day ("mmcf/d") over the final 24 hours of the four day flow period. The well was also producing approximately 770 barrels per day ("bbls/d") of condensate at the end of the test, although 100 percent of the frac fluid hadn't been recovered. Shallow-cut plant recoveries of natural gas liquids ("NGL's") are expected to yield an additional 30 to 35 bbls/mmcf.
The Donnybrook, Pennant, Blackbird partnership has also put out some positive results, with its first well which was drilled over roughly half the lateral length of Delphi’s horizontal well. Their first well received promising results to the tune of 1,011 barrels of oil equivalent per day (“boe/d”) with 295 bbls/d in NGLs, and a second, more-promising, well at 200 metres more lateral length than Delphi drilled at 15-32-60-22 W5M with results soon to follow. A delay in the timing of the results has raised questions, but once they are done ironing out some mechanical hiccups, production tie-in of both wells is expected by April 1. A third well is also on the agenda for this partnership with a drilling commencement date pegged for the third week of February.
With natural gas prices still slumping in the sub $2.50 range, Celtic and its neighbours are pulling good news stories out of the ground within the Montney Formation. This formation, that spans the Alberta-BC border, has drawn both praise and criticism depending on the year and the value of natural gas from the investment community. That said, if producers such as Celtic and the other companies drilling the Bigstone portion continue their exploration work, the value of both the liquid-heavy wells and the share prices of the companies drilling them should continue to drive upwards.
G. Joel Chury is a veteran investment columnist for Resource World Magazine and the Editor in Chief of VantageWire.com. His knowledge of both the mining and oil and gas sectors along with his ability to sift through TSX.V data and press releases makes him one of the best up-and-coming newsletter writers on the web.
With a diverse background that includes investor relations writing and consulting for publicly-held companies and previous field work as a surface land agent for oil and gas companies, Mr. Chury seamlessly translates technical results geared towards engineers and geologists into a more readable language that’s palatable for investors on the go. As well, Mr. Chury is an avowed silver bug, always willing to join the debate on where the precious metals market is heading.
Disclaimer: No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. VantageWire makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the VantageWire only and are subject to change without notice. VantageWire assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this article and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. The author of this article does not currently own shares of any of the companies mentioned in this article. Furthermore, VantageWire assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this article.
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January 21st, 2018
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