“After we go through spring breakup, which we’re almost through now, we will focus on the drillbit,” said Gregg Smith, president and chief operating officer, at the new company’s first annual general meeting in Calgary.
“We will have 17 rigs running continuously.”
PetroBakken was formed last summer from Saskatchewan light oil and B.C. natural gas assets held by Petrobank Energy Ltd., combined with TriStar Oil and Gas in a $2-billion merger. Petrobank still owns 62 per cent of PetroBakken.
In early 2010, PetroBakken spent just over $1 billion to buy three companies focused on the Cardium play, leading Smith to quip Wednesday that one of the company’s directors had suggested changing the name to “PetroBacardi.”
Smith said PetroBakken aims to drill over 100 wells this year in the Bakken formation, plus 65 wells in the Alberta Cardium. It will have two rigs in conventional plays in southeast Saskatchewan, drilling 45 wells.
He said recent changes to the Alberta royalty regime have led to changes in PetroBakken’s approach to the Cardium because the royalty holiday applies to the first 50,000 barrels from a well in a year, and a typical well is delivering less.
It will therefore lengthen horizontal well pairs from 1,000 metres and seven fracture stimulations to 1,200 to 1,400 metres and 15-20 fracs, Smith said.
Shareholders asked a total of five questions, including a request for a comparison of rival Crescent Point Energy Corp.’s approach to the Bakken and PetroBakken’s.
“We’re comfortable with our land position and comfortable with what we’re getting out of it,” Smith responded.
“They’re taking the approach of fracking less and going with a water flood. We’re taking the approach that we think the best economics are in primary recovery. We’re focusing on the bilaterals with intense fracking and currently experimenting and planning pilots using natural gas or CO2 based on the fact our reservoir simulation models tell us that, given the tightness of this reservoir, that’s most likely going to be the best way to sweep the reservoir and not just sweep fracs.”
On the natural gas side, PetroBakken is drilling an evaluation well into its Horn River acreage and will drill three wells into the Montney formation this year, mainly to maintain its asset position as it waits for natural gas prices to rise.
In its first quarter financial report earlier this month, PetroBakken noted net income of $39 million on revenue of $276 million, with average production of 43,000 barrels of oil equivalent per day.