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 Light Oil Resource Play. Our technical staff 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
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.
On Montney/Doig Natural Gas Resource Play vertical wells 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).
Well spacing is an important consideration for the Montney/Doig Natural Gas Resource Play. Industry competitors typically have drilled up to four wells per section per stratigraphic zone on 160 acre spacing. Recently, industry competitors in the Peace River Arch area have drilled up to eight wells per section per stratigraphic zone using 80 acre spacing units. Reserve assignments by AJM Deloitte to Birchcliff's lands in the Montney/Doig Natural Gas Resource Play are currently based on four horizontal wells per section, per stratigraphic zone. Our technological analysis supports reducing inter-well spacing and in the future we expect AJM Deloitte to assign additional future horizontal locations and reserves based on reduced inter-well spacing.
WORSLEY LIGHT OIL RESOURCE PLAY
The Worsley Light Oil Resource Play has demonstrated consistent and prolific production performance. Successful expansion of the pool, waterflood performance and the application of horizontal drilling and multi-stage fracture stimulation technology have all contributed to its continued reserve growth, production growth and high netbacks. Our assets in the Worsley Property (acquired in September 2007) have provided $317.1 million in operating funds flow from September 2007 to December 2012, $260.3 million of which has been invested back into the property. Our Worsley Light Oil Resource Play horizontal wells 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.
NEW TIGHT/SHALE OIL RESOURCE PLAY DEVELOPMENT
In Birchcliff's core area of the Peace River Arch, numerous industry competitors have announced significant developments on a number of new resource plays, with a strong bias to new tight/shale oil resource plays. Throughout 2012 and the beginning of 2013, there have been significant lands posted and acquired in the Peace River Arch area and numerous new wells have been drilled, completed and brought on production, targeting these new resource plays, including the Montney, Charlie Lake, Nordegg and the Duvernay. We continue to spend significant time analyzing and evaluating various new resource plays in the Peace River Arch area. In 2012 Birchcliff acquired 76,909 acres of undeveloped lands, at 100% working interest, which we believe are prospective for one or more of these new resource plays. Some of these lands are also prospective for the Montney/Doig Natural Gas Resource Play or the Worsley Light Oil Resource Play.