During June and July, Trilogy completed 2.0 net wells to further evaluate the western and northern portions of the Kaybob Montney oil pool. The western well, drilled to a bottom hole location at 16-12-64-19W5, came on production July 27, 2015 and, during the initial 5 days of production, averaged 639 Bbl/d of crude oil and 1.1 MMcf/d of natural gas up a 2 7/8 inch tubing with a tubing pressure of approximately 1,200 kPa. The northern well, drilled to a bottom hole location at 11-31-64-18W5, came on production July 16, 2015 and flowed at an average rate of 939 Bbl/d of crude oil and 6.4 MMcf/d of natural gas up 7 inch casing at 6,000 kpa over the first 14 days of production. Production tubing and a pump jack will be installed in the 11-31-64-18W5 well once the well stops flowing. For the second quarter, Trilogy’s Kaybob Montney oil pool averaged 7,600 Boe/d with an average operating income of $ 29.88/Boe and an average realized crude oil price of $63.76/Bbl (Canadian). This accounts for approximately 26 percent of the Company’s quarterly production and 45 percent of its quarterly operating income.
Through 2014, Trilogy built on the success it achieved in the previous three years with the continued development drilling of the Kaybob Montney oil pool. In 2010 through 2013, Trilogy drilled a total of 78 wells into the pool, followed by an additional 29 wells in 2014. Given the current commodity price environment, Trilogy plans to reduce its drilling program to 2 wells in the first quarter and evaluate its activity levels once crude oil prices improve
In 2014, Trilogy spent approximately $118 million to drill and complete 29 wells to find 5.2 MMBoe of proved reserves and 6.5 MMBoe of proved plus probable reserves. On average, the year’s drilling and completion program added 180 MBoe of proved reserves per well (61 percent oil reserves) and 226 MBoe per well of proved plus probable reserves (61 percent oil reserves). This represents a finding and development cost of $22.62/Boe for proved reserves and $18.15/Boe for proved plus probable reserves.
In 2014, production from the pool averaged 10,214 Boe/d (62 percent oil and natural gas liquids production), with operating costs of $7.74/Boe and operating netback of $48.09/Boe. As of year-end 2014, the pool has produced approximately 8.3 MMBbl of oil from the horizontal oil wells drilled into the pool since its discovery in 2010. Under the current royalty regime, each well qualifies for royalty relief, where Crown royalties are reduced to 5 percent on the initial 80 to 90 MBoe of production. Historically, the costs of approximately $4 million to drill, complete and tie-in are usually paid out in less than one year of production.
Production in 2014 was less than expected due to wells on the eastern portion of the pool performing below expectations. Wells drilled later in the year on the north and western portions of the pool appear to be performing at or above type curve expectation and will be the focus of additional drilling when commodity prices improve.