Trilogy participated in a joint-venture horizontal well at 15-33-060-20W5 targeting the Duvernay formation; this well was rig released on August 5, 2010. Completion operations and a flow test were concluded on September 14, 2010 after completion of 6 of the 13 planned fracture stimulations. Operational issues prevented the remaining 7 fractures from being completed; however the results of the first 6 stages provided encouraging results. The Duvernay shale was shown to contain a significant amount of natural gas liquids (approximately 75 barrels of natural gas liquids per million cubic feet of natural gas) in addition to producing approximately 2 MMcf/d of sweet natural gas. The operator of the project is in the process of tieing the well into the existing gathering system and initial production is anticipated before the end of Q1 2011.
Drilling operations were under taken in the first quarter 2011 to drill a second horizontal well on the joint-venture block to further develop technical knowledge on the play and to evaluate the full-cycle economic and resource potential of the Duvernay shale in the Kaybob area. The second well was spud at a surface location at 16-14-60-20W5 and drilled to a bottomhole location of 3-13-60-20W5. The surface location of the second well is approximately three miles southeast of the surface location of the original discovery location. Drilling operations were completed on February 20, 2011 and it is anticipated that the completion operation on the second well will be finished in March and, given continued success; the well should be on production during the second quarter of 2011.
Trilogy has greater than 100 net sections of Duvernay mineral rights in the core of this emerging resource play, and a total of greater than 225 net Duvernay sections in the greater Kaybob area. Trilogy believes this area could provide significant upside to its shareholders if the play type proves to be an economic success, particularly in light of the Alberta Government’s reduced royalty rates for shale gas wells (5 percent for 3 years with no volume limit).
The map shows Trilogy’s land position in the Duvernay formation. The Duvernay shales are organic-rich shales that were deposited in the off reef position of Leduc reefs (grey outline). The Duvernay is thought to be oil prone in the northeast portion of the map and liquids-rich gas in the central portion, trending toward a dry gas reservoir in the southwest area of the map.
Trilogy managed the drilling, completion and tie in operations for the second horizontal well targeting the Devonian Duvernay shale formation under a previously announced joint venture with Celtic Exploration Ltd. and Yoho Resources Inc., pursuant to which each partner has a one-third working interest in 30 gross sections of land.
The well (the “3-13 well”) was drilled from a surface location at 16-14-60-20W5 to a bottom hole location at 03-13-060-20W5, with a total depth of 4,866 meters. The horizontal lateral was 1,391 metres in length within the Duvernay formation. The well was drilled and cased over 50 days at a cost of approximately $6.5 Million for the drilling operation.
Completion operations began March 8, 2011 and were concluded in late April. The well was fracture stimulated in 31 perforated intervals in 12 separate stages along the length of the horizontal wellbore. In total, approximately 2,300 tonnes of sand and 138,600 barrels of slick water were used to stimulate the well. The well was completed using a staged “plug and perf” horizontal completion technique, incorporating perforation clusters (2 and 3 per stage) to stimulate the well. Following the fracture stimulation, the plugs were drilled out to permit the well to flow without obstruction in the horizontal portion of the well. Completion costs for the well have totaled approximately $11 Million; however, Trilogy expects to see substantial costs savings on subsequent wells targeting this formation as the 3-13 well was the first to use the “plug and perf” completion methodology in the Duvernay.
The 3-13 well has been tied-in since April 10, 2011 in order to reduce flared emissions during the completion and evaluation period. The well was flowing up 7 inch casing at approximately 1,250 Boe per day, consisting of 5.2 MMcf per day of sweet natural gas and an estimated 390 barrels per day of natural gas liquids, including 180 barrels per day of 56° API condensate, and 1,450 barrels per day of completion water. Production tubing was installed in the well and the well has been placed on production to evaluate the longer-term production performance of the play. The first Duvernay horizontal well at 15-33-60-20W5 was tied in during the first quarter of 2011 and has been producing since April 26, 2011. Additional analysis is required to determine the production composition, including the natural gas liquid content, from this Duvernay shale exploration play.
Trilogy is encouraged by the results from the two horizontal Duvernay shale wells and particularly the high liquids content and will be evaluating opportunities to further evaluate the Duvernay formation in the remainder of the year. Trilogy expects to participate in one more well targeting the Duvernay formation during the balance of 2011. Trilogy currently owns approximately 168,409 gross acres and 138,173 net acres (263 gross sections and 216 net sections) of land with Duvernay rights at Kaybob and surrounding areas.
Trilogy managed the drilling, completion and tie in operations for the second horizontal well targeting the Devonian Duvernay shale formation under a previously announced joint venture with Celtic Exploration Ltd. and Yoho Resources Inc., pursuant to which each partner has a one-third working interest in 30 gross sections of land.
The well (the “3-13 well”) was drilled from a surface location at 16-14-60-20W5 to a bottom hole location at 03-13-060-20W5, with a total depth of 4,866 meters. The horizontal lateral was 1,391 metres in length within the Duvernay formation. Completion operations began March 8, 2011 and were concluded in late April. The well was fracture stimulated in 31 perforated intervals in 12 separate stages along the length of the horizontal wellbore. In total, approximately 2,300 tonnes of sand and 138,600 barrels of slick water were used to stimulate the well. The well was completed using a staged “plug and perf” horizontal completion technique, incorporating perforation clusters (2 and 3 per stage) to stimulate the well. Following the fracture stimulation, the plugs were drilled out to permit the well to flow without obstruction in the horizontal portion of the well.
The 3-13 well was tied-in April 10, 2011 and was flowing up 7 inch casing and had initial production of approximately 1,250 Boe/d. Production tubing was installed in the well and the well has been placed on production to evaluate the longer-term production performance of the play. Additional analysis is required to determine the production composition, including the natural gas liquid content, from this Duvernay shale exploration play. However, initial production to date has indicated that the natural gas liquids content is higher than originally expected and may contain up to 90 barrels per MMcf of condensate plus additional associated natural gas liquids recovered at the gas plant. Additional work is required to further understand the reservoir to optimize natural gas liquids recovery and maximize the rate of return for the wells.
Trilogy is encouraged by the results from these two horizontal Duvernay shale wells and particularly the high liquids content. Trilogy is evaluating opportunities to further evaluate its Duvernay land holdings in the Kaybob area and will continue to monitor industry activity directed towards the exploitation of the Duvernay shale. Trilogy currently owns approximately 163,129 gross acres and 132,813 net acres (255 gross sections and 207 net sections) of land with Duvernay rights at Kaybob and surrounding areas.
