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Welcome.
this webinar will begin at
9:00 AM MST, Tuesday, February 28.
Presented by:
Matthew Tymchuk, Manager, Capital Strategies
Todays presenters
matt.tymchuk@sproule.com
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Disclaimer
This material is private. It does not take into account any specific business objectives of the recipient. The information herein does not constitute
advice, nor an offer to buy or sell instruments, products or services. Dealing in commodities, financial instruments, derivatives or other products
involves risk. The recipient of this material should not deal in these products unless it understands their nature and its exposure. It should seek
independent advice before making any investment or other decision. While every effort has been made to ensure the information herein is accurate, its
accuracy cannot be guaranteed. The author accepts no liability for any damages (including, but not limited to, lost profits) arising from reliance upon
this material. Unauthorized copying of this material is strictly prohibited without the prior written consent of the author
This presentation contains forward-looking information and statements (collectively, "forward-looking statements") within the meaning of applicable
Canadian securities legislation, concerning the outlook of commodity prices and the potential impact these could have on industry netbacks. Forward-
looking statements include, but are not limited to, statements with respect to the estimation of commodity prices, permitting time lines, currency
exchange rate fluctuations, government regulation of oil and gas exploration and development activities, environmental risks, and judicial ruling.
Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of
such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotations thereof. All such forward-looking statements are based on the opinions and estimates of the relevant management as of the
date such statements are made and are subject to important risk factors and uncertainties, many of which are beyond the Corporation's ability to
control or predict.
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Todays webinar will answer a critical question
The facts
What early life Companies disclose early life production and
test data
production data Stakeholders use these disclosed rates to
make investment decisions
should be These early life rates oftentimes dont give a
reliable indication of a well or plays long term
considered when performance
The analysis
making investment Compare numerous performance metrics relating
short and long term performance
decisions? Quantify the quality of each of these metrics
Identify plays where specific metrics give a better
indication of long term performance
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Who wants to use early life data to predict long term
results?
Everyone
Producing company
A&D groups
Partners
Investors
Banks / Lenders
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I have a great well! What do I do?
source: boereport.com
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What do these rates mean?
Compares apples to
oranges
Need to consider:
production rate, choke size,
length of test, pressure,
fluid content, etc.
Time consuming, lack of
publically available data
not feasible
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So, what does everybody do?
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How has that turned out?
Montney example
Groundbirch Area
Filtered Upper
Montney (Layers A,
B1, B2, B3)
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How has that turned out?
Montney Groundbirch example
Peak Rate vs 12 Month Cumulative Production
1,800,000
y = 23.358x - 13494
Poor correlation
R = 0.0155
1,600,000
Coefficient of
Producing Day Peak Rate (mcf/d)
1,400,000
1,200,000
determination << 0.5
1,000,000 Obviously bad data
800,000 included
600,000
400,000
200,000
0
0 500 1,000 1,500 2,000 2,500 3,000
12 Month Cumulative Production (MMcf)
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Montney Groundbirch example
Examine bad data point
Peak Rate vs 12 Month Cumulative Production
1,800,000
y = 23.358x - 13494
R = 0.0155
1,600,000
Producing Day Peak Rate (mcf/d)
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
0 500 1,000 1,500 2,000 2,500 3,000
12 Month Cumulative Production (MMcf)
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Montney Groundbirch example
Montney Groundbirch example
Peak Rate vs 12 Month Cumulative Production
35,000
Poor correlation
y = 3.3854x + 2686.6
30,000
R = 0.2917 Coefficient of
Producing Day Peak Rate (mcf/d)
25,000
determination < 0.5
20,000 Many outliers, statistically
15,000
significant
10,000 This has excluded bad
5,000
data which is obviously
0
wrong
0 500 1,000 1,500 2,000 2,500 3,000
12 Month Cumulative Production (MMcf)
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Montney Groundbirch example
Check if outliers are bad data or not
Peak Rate vs 12 Month Cumulative Production
35,000
y = 3.3854x + 2686.6
R = 0.2917
30,000
Producing Day Peak Rate (mcf/d)
25,000
20,000
15,000
10,000
5,000
0
0 500 1,000 1,500 2,000 2,500 3,000
12 Month Cumulative Production (MMcf)
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What about press released test results?
Quality control and lack of complete data an issue
8,000 5,000
4,000
6,000
3,000
4,000
2,000
2,000
1,000
0 0
0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500 3,000
12 Month Cumulative Production (MMcf) 12 Month Cumulative Production (MMcf)
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Montney Groundbirch example
Even better?
6 Month Cumulative Production vs 12 Month
Cumulative Production High R2
1,800
y = 0.5271x + 62.965
R = 0.897 Few outliers
6 Month Cumulative Production (MMcf)
1,600
1,400
Reliable predictions
1,200
1,000
We transform data (Pday,
800 not Cday cumulative
600
volumes)
400
200
0
0 500 1,000 1,500 2,000 2,500 3,000
12 Month Cumulative Production (MMcf)
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Montney Groundbirch example
Correlations hold up after 2 and 3 years
6 Month Cumulative Production vs 24 Month 6 Month Cumulative Production vs 36 Month
Cumulative Production Cumulative Production
1,600 1,600
y = 0.3082x + 104.95 y = 0.2292x + 129.13
R = 0.8946 R = 0.8649
6 Month Cumulative Production (MMcf)
1,200 1,200
1,000 1,000
800 800
600 600
400 400
200 200
0 0
0 1,000 2,000 3,000 4,000 5,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
24 Month Cumulative Production (MMcf) 36 Month Cumulative Production (MMcf)
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Montney example
Correlation quality changes area by area, play by play
Groundbirch Layers A, B1, B2, B3 Valhalla
Peak Rate vs 12 Month Cumulative Production Peak Rate vs 12 Month Cumulative Production
35,000 1,400
y = 3.3854x + 2686.6 y = 6.9125x - 19.002
R = 0.2917 R = 0.9124
Producing Day Peak Rate (mcf/d)
25,000 1,000
20,000 800
15,000 600
10,000 400
5,000 200
0 0
0 500 1,000 1,500 2,000 2,500 3,000 0 50 100 150 200
12 Month Cumulative Production (MMcf) 12 Month Cumulative Production (Mbbl)
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Different plays, different relevant correlations
Example: Midale play, Steelman area
Peak Rate vs. 6 Month Cumulative Production vs.
12 Month Cumulative Production 12 Month Cumulative Production
2,500 250
y = 7.3689x - 6.6428 y = 0.744x - 5.5888
R = 0.7681 R = 0.8499
2,000 200
1,500 150
1,000 100
500 50
0 0
0 50 100 150 200 250 300 350 0 50 100 150 200 250 300 350
12 Month Cumulative Production (Mbbl) 12 Month Cumulative Production (Mbbl)
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Pday or Cday
We have been showing a modified Pday value
6 Month Cumulative Production vs 12 Month 6 Month Cumulative Calender Day Production vs 12
Cumulative Production Month Cumulative Calender Day Production
1,800 1,200
y = 0.5271x + 62.965 y = 0.4761x + 32.945
R = 0.897 R = 0.8367
6 Month Cumulative Production (MMcf)
1,200 800
1,000
600
800
600 400
400
200
200
0 0
0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500
12 Month Cumulative Production (MMcf) 12 Month Cumulative Production (MMcf)
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Other considerations
Sproule recommends:
Splitting data into similar well types (formation/geology/fluid, etc)
Evaluating different correlations, and understanding benefits and
limitations of each
Use the most data available (6 months of production trumps high
initial test rate
Remove time periods without production (convert Cday to Pday
equivalent)
Ensuring that data is cleaned before using remove obviously
wrong data
Effectively using appropriate correlations will allow for quicker, more
accurate analysis of new wells within a play
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How can I get these correlations?
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Questions