BIRCHCLIFF'S RESOURCE PLAYS IN THE PEACE RIVER ARCH

Birchcliff is focused on two established resource plays within the Peace River Arch, the Montney/Doig Natural Gas Resource Play and the Worsley Charlie Lake Light Oil Resource Play. Our technical teams are also analyzing and evaluating new resource plays on which virtually all of our undeveloped land has potential.

Birchcliff characterizes its resource plays as plays that have regionally pervasive, continuous, low permeability hydrocarbon accumulations or systems that usually require intensive stimulation to produce. The production characteristics of these plays include steep initial declines that rapidly trend to much lower decline rates, yielding long life production and reserves. Resource plays exhibit a statistical distribution of estimated ultimate recoveries and therefore provide a repeatable distribution of drilling opportunities. As more wells are drilled into a resource play, there is a substantial decrease in both the geological and technical risks.

MONTNEY/DOIG NATURAL GAS RESOURCE PLAY

September 30, 2014

The Montney/Doig Natural Gas Resource Play is classified by Birchcliff as a hybrid resource play because it is comprised of approximately 300 metres (1,000 feet) of gas saturated rock with both tight silt and sand reservoir rock interlayered with shale gas source rock. Utilizing the industry nomenclature, Birchcliff has divided the geologic column into eight intervals from youngest (top) to oldest (bottom); Doig Phosphate, Basal Doig, Montney D5, Montney D4, Montney D3, Montney D2, Montney D1 and Montney C. Prior to the recent exploration success in the Montney D4, Birchcliff commercialized and drilled wells in two plays, the Basal Doig/Upper Montney Play and the Middle/Lower Montney Play.

Horizontal wells on the Montney/Doig Natural Gas Resource Play that utilize multi-stage fracture stimulation technology are drilled to a measured depth of 4,000 to 5,000 metres and deliver initial productivity rates of 2,000 to 8,000 Mcf per day (333 to 1,333 boe per day).

Birchcliff believes its wells drilled in the Basal Doig interval of the Basal Doig/Upper Montney Play access the resources in the Doig Phosphate, Basal Doig and the upper most interval of the Montney - the Montney D5. The second play Birchcliff has drilled wells in is the Middle/Lower Montney Play and the specific interval drilled is the Montney D1 interval.

To quantify the potential of these two mature proven plays as of September 30, 2014, Birchcliff owns 307.6 net sections which have potential for the Middle/Lower Montney Play and 287.4 net sections which have potential for the Basal Doig/Upper Montney Play. Birchcliff's total land holdings on these two mature proven plays are 595.0 net sections. On full development of four horizontal wells per section per play, Birchcliff has 2,380.2 net existing horizontal wells and future horizontal drilling locations. With 145.9 net horizontal locations drilled to September 30, 2014, there remains 2,234.3 net future horizontal drilling locations on these two mature proven plays.

There are four other intervals in the Montney/Doig Natural Gas Resource Play that previous to the third quarter of 2014 Birchcliff had not yet drilled wells in, but which, Birchcliff feels are highly prospective; the lowermost Montney C, the Montney D2, the Montney D3 and the Montney D4.

Recently, Birchcliff drilled two exploration horizontal wells in the Montney D4 with very positive results. The first well was at Pouce Coupe and the second was in the Elmworth/Sinclair area. These drilling results establish the commerciality of the Montney D4 in both of these areas. These intervals provide potential to significantly increase Birchcliff's opportunity portfolio.

Well spacing is an important consideration for the Montney/Doig Natural Gas Resource Play. Industry competitors in the Peace River Arch area have drilled up to eight horizontal wells per section, per stratigraphic zone, using 80 acre spacing units. Reserve assignments to Birchcliff's lands in the Montney/Doig Natural Gas Resource Play by Deloitte LLP, our independent reserves evaluators, are currently based on four wells per section, per stratigraphic zone. Birchcliff's technological analysis supports reducing inter-well spacing and in the future, the Corporation expects Deloitte to assign additional future horizontal locations and reserves based on reduced inter-well spacing.

WORSLEY CHARLIE LAKE LIGHT OIL RESOURCE PLAY

Successful expansion of the Worsley Charlie Lake oil pool, waterflood performance and the application of horizontal drilling and multi-stage fracture stimulation technology have all contributed to its continued production and reserve growth and high netbacks.

Horizontal wells on the Worsley Charlie Lake Light Oil Resource Play that utilize multi-stage fracture stimulation technology are drilled to a measured depth of 2,500 to 3,500 metres and deliver initial productivity rates of 60 to 400 boe per day.

 

 

 

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