Presley Montney Gas Development

Trilogy’s 2015 budget provided for 3 (2.5 net) wells to be drilled into the Presley Montney liquids-rich gas pool.  Production from the area averaged approximately 7,850 Boe/d in 2015 as compared to 10,309 Boe/d in 2014.  Operating costs for this pool increased from $5.50/Boe in 2014 to $6.04/Boe in 2015 as production declined, while over the same period operating netback fell from $26.56 /Boe in 2014 to $13.33/Boe in 2015 reflecting the decline in commodity prices.

Trilogy currently plans to limit drilling operations in the Presley Montney gas pool to 2 (1.5 net) wells in 2016 given the current weak natural gas price forecast. The drilling program consists of 2 extended length horizontal (approximately 2 mile lateral) wells that are forecast to cost approximately $5.3 million each to drill, complete and tie-in, which compares favourably to similar wells that were drilled, completed and tied-in in the past for approximately $7 million.  However, if commodity prices improve through the year, Trilogy could allocate additional capital to this pool provided the economic rates of return are justified given the expected capital cost and commodity price.  Trilogy will continue to prepare drilling locations and evaluate infrastructure alternatives for the Montney gas pool as well as operated Duvernay production in the Presley area so as to be prepared for efficient full field development when commodity prices increase.