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BC Land Sale

By Richard Macedo

BC collected $61.23 million in bonus bids for its 2016/2017 fiscal year, a strong rebound after a record low $15.93 million for 2015/2016.

The current fiscal year ends on March 31, 2017 -- BC holds one sale a month so the March 22 auction was the final one for the province's fiscal year.

The rebound was driven by a strong final fiscal quarter, largely helped by the January sale of $39.62 million.

From January-March 2017, the government has collected $48.14 million on 24,142 hectares at an average price of $1,993.95. To the same point of 2016, industry had paid $2.1 million for 8,652 hectares at an average price of $242.56.

On Mar. 22, 2017, 12 parcels were sold covering 8,201 hectares, with an average price of $588.42 per hectare on bonus bids of $4.83 million.

The highest value parcel in the sale was a drilling license in the Sundown - Bissette Creek area, approximately 30 kilometres southwest of Dawson Creek. This parcel, picked up by Scott Land & Lease Ltd., earned over $2.27 million in tender bonus at an average price of $2,589.97 per hectare.

2017
Sale Date Hectares Bonus ($) Average Price / Hectare
January 7 764 $39,621,805 $5,103.00
February 8 177 $3,690,533 $451.33
March 8 201 $4,825,618 $588.42
2017 Total 24 142 $48,137,956 $1,993.95

 

Land Sale Annual History
Year Hectares Bonus ($) Average Price / Hectare
2007 595 559 $1.05 billion $1,758
2008 756 752 $2.66 billion $3,518
2009 389 664 $892.9 million $2,291
2010 381 132 $844.4 million $2,215
2011 191 529 $222.68 million $1,162.66
2012 136 521 $139.26 million $1,020.08
2013 119 095 $224.68 million $1,886.60
2014 148 705 $382.79 million $2,574.17
2015 62 197 $18.36 million $295.13
2016 96 617 $15.19 million $157.22
JuneWarren-Nickle's Energy Group

Alberta Land Sales

By Richard Macedo

The Alberta government attracted $9.82 million in bonus bids at its first March land sale, including $673,309 paid to acquire 7,017.6 hectares of oilsands acreage.

The industry acquired 53,820 hectares at the March 8 sale at an average price of $182.52.

Highlights of the sale included a $1.21 million bid by Britt Resources Ltd. The broker picked up a couple of sections at an average price of $1,578.26.

Also at the sale, The Soo Line Resource Group Ltd. acquired a lease in for $538,112 at an average of $1,051.00.

The Alberta government on March 22nd attracted $19.89 million in bonus bids at its land sale on 61,198 hectares at an average price of $325.05, powered by a license that was sold for over $10 million.

Year-do-date, the province has attracted $82.72 million on 290,786 hectares at an average of $284.49.

The $10.77-million parcel sold to Antelope Land Services Ltd. for an average price of $3,506.40.

Also, Scott Land & Lease Ltd. acquired the rights to a parcel for $1.49 million, paying an average of $1,458.23.

2017
Sale Date Hectares Bonus ($) Average Price / Hectare
January 11 66 088 $12,725,037 $192.55
January 25 22 717 $5,216,812 $229.64
February 08 86 964 $35,067,580 $403.24
March 08 52 859 $9,823,122 $185.84
March 22 62 158 $19,892,312 $325.05
2017 Total

290 786

$82,724,863 $284.49

 

Land Sale Annual History
Year Hectares Bonus ($) Average Price / Hectare
2006 4 231 290 $3,433,708,927.04 $811.50
2007 3 006 658 $1,360,413,583.19 $452.47
2008 3 682 798 $1,228,520,837.80 $333.58
2009 1 842 058 $741,673,011.95 $402.63
2010 3 983 622 $2,414,581,311.83 $606.13
2011 4 606 952 $3,641,012,381.26 $790.33
2012 3 158 488 $1,120,780,950.83 $354.85
2013 2 277 948 $698,321,632.93 $306.56
2014 1 089 453 $494,025,614.35 $453.46
2015 1 615 398 $298,739,730.19 $184.93
2016 996 577 $148,563,229.17 $149.07
JuneWarren-Nickle's Energy Group

Alberta Fiscal Year Land Sales

By Richard Macedo

Thanks to a surge in its final fiscal quarter of 2016/2017, the Alberta government was able to nearly pull even with land spending from the previous year.

For 2016/2017, the province collected $203.01 million on 1.03 million hectares at an average of $196.59. For 2015/2016, industry spent $205.52 million for 1.34 million hectares at an average of $153.32.

A surge of spending in the fiscal fourth quarter (January-March 2017) of $82.72 million helped narrow the gap year-on-year. For the first nine months of the fiscal year, the province collected $120.29 million in bonus bids on 741,895 hectares at an average of $162.14.

JuneWarren-Nickle's Energy Group

Wells Licensed or Spud, 2017

By Carter Haydu

Winter drilling season traditionally equates to a spike in activity in January and February activity, but the number of non-oilsands wells licensed or spud in Western Canada so far in 2017 is greatly exceeding activity in the first two months of last year.

There were 814 wells rig released in the Foothills Front (AB2) zone last year, where Peyto Exploration & Development Corp. was top operator -- a 24.7-per-cent decrease from 2015. For the year ended Dec. 31, 2016, there were 1,262 licenses issued in this PSAC zone, or 151 fewer licenses than were issued in full-year 2015.

In January-February 2017, there were 319 wells rig released in this zone, which totals 138 more wells rig released compared to during the same period a year ago. Also, there were 329 licenses issued in January-February 2017, which is 163 more than during the same timeframe last year. The Foothills Front zone saw 1.44 million metres drilled in January-February 2017, compared to 838,478 metres drilled in the zone during the same 2016 timeframe.

Northwestern Alberta (AB7) has also seen a big percentage increase in year-over-year rig-released well counts. The 110 wells rig released during the first two months of 2017 represent a 156 per cent increase from the same period last year.

However, the zone saw a 39-per-cent drop to 184 total wells rig released in all of 2016 when compared to 2015. Penn West Petroleum Ltd. was top operator last year for this particular PSAC zone. In regards to licenses issued last year for this zone, there were 344 (compared to 465 in 2015). For January-February 2017, there were 61 licenses issued for the Northwestern Alberta zone (compared to 59 a year ago).

Spirit River activity appears stable in terms of the number of wells and percentage of wells targeting these zones.

Northern British Columbia (BC2) saw 481,353 metres drilled in January-February 2017, compared to 369,198 metres drilled in the year-prior period. There were 116 rig releases in this zone for January-February 2017, which is up 27 per cent from the same period last year. For full-year 2016, Northern BC saw 342 rig releases, which is 37-per-cent less than in 2015.

JuneWarren-Nickle's Energy Group

Prince Rupert LNG

A division of the Shell Group will end development of the Prince Rupert LNG project, originally proposed for Ridley Island at the Port of Prince Rupert, British Columbia.

BG International Limited, a member of the Shell Group since being acquired last year, said it would discontinue work on the project.

The Prince Rupert project was part of Shell's global portfolio review of combined assets, which resulted in the decision to discontinue work on the project. During the review, Shell said the local Prince Rupert project team "continued to engage locally and to support environmental initiatives and social investment activities in the area." The Prince Rupert office will remain open through May 2017 to complete community engagement, Shell said.

Shell, however, remains a joint venture partner in another West Coast LNG project, LNG Canada, proposed for Kitimat, British Columbia. In that project, Shell holds a 50 per cent stake, with joint venture partners PetroChina (20 per cent), KOGAS (15 per cent) and Mitsubishi Corporation (15 per cent).

LNG Canada continues to be "actively progressed" by Shell and its joint venture partners as an opportunity to bring Canadian gas to growing global gas markets, Shell Canada said. While a final investment decision (FID) on the project was originally scheduled for last year, it was indefinitely delayed.

JuneWarren-Nickle's Energy Group

NGTL Towerbirch Expansion

NOVA Gas Transmission Ltd. expects to start work in April on its $439 million Towerbirch expansion project which received federal government approval, subject to 24 conditions.

The Towerbirch pipeline facilities, which will transport gas from the Montney in British Columbia to North American markets, are expected to be in service in the fourth quarter of 2017.

The project will create up to 750 jobs during construction, address the need for increased natural gas transmission capacity along the existing NGTL system and support economic growth, said the government in announcing the approval.

The Towerbirch expansion includes the construction and operation of approximately 87 kilometres of new natural gas pipeline and associated facilities, consisting of the Tower Lake Section (roughly 32 kilometres of 30-inch pipeline) and the Groundbirch Mainline Loop (approximately 55 kilometres of 36-inch pipe). Approximately 82 per cent of the project will parallel existing rights-of-way or existing disturbances, and 89 per cent will be located on private land.

NGTL's planned in-service date for the pipeline components of the project is Nov. 1, 2017, along with the Groundbirch East receipt expansion and the Tower Lake receipt station. Three additional receipt meter stations will come into service over the following year.

JuneWarren-Nickle's Energy Group

License Count To End Of February

By Stephen Marsters

New well permitting over the first two months of the year is at a three-year high, according to Daily Oil Bulletin records, powered by big year-over-year increase in Saskatchewan licenses.

To the end of February, 1,670 wells have been authorized compared to 799 in the first two months of 2016 (an increase of 109 per cent), and 1,454 wells in 2015.

Overall, operators across Canada licensed 684 wells in February compared to 264 a year ago.

Saskatchewan licensed 268 wells last month compared to 111 in February 2016. In the first two months of 2017 the province has permitted 747 wells versus 250 a year ago (up 199 per cent).

Records show 398 wells were licensed in Alberta in February 2017 compared to 131 a year ago. In the January-February period, the license count stands at 857, up 86 per cent from 460 in the first two months of 2016.

Gas-prone British Columbia approved 63 new licenses last month, up from 15 permits the previous year. Over the first two months of the year, the province has approved 92 licenses compared to 58 a year ago (an increase of 59 per cent).

Permitting levels in Manitoba lifted to 18 in February 2017 from five wells licensed last February. The two-month tally has increased 25 per cent to 35 from 28 in 2016.

Operators licensed 1,146 wells targeting oil or bitumen in Western Canada in the January-February period (last year: 400), compared to 259 gas or CBM targets (last year, also 259).

Producers licensed 536 horizontal wells last month, with 1,303 horizontal wells permitted over the first two months of the year -- up from 599 horizontal wells permitted over last year's January-February period.

Operators licensed 47 oilsands evaluation wells last month, up from 20 last year. Over the first two months of the year, 64 oilsands evaluation wells have been authorized compared to 57 in 2016.

The top five licensees of new wells in February, excluding experimental holes, were: Crescent Point Energy Corp. (63), Tourmaline Oil Corp. (38), Canadian Natural Resources Limited (33), Teine Energy Ltd. (32), and Torc Oil & Gas Ltd. (27).

Including experimental wells, the top licensees last month were: Crescent Point (63), Tourmaline (38), Fort Hills Energy Corporation (36), Canadian Natural (35) and Teine (32).

JuneWarren-Nickle's Energy Group

Trican Buys Canyon

By Paul Wells

Trican Well Service Ltd. is about to get a lot bigger while competition in the western Canadian pressure pumping sector contracts after the company announced its acquisition of Canyon Services Group Inc. in a deal valued at $637 million.

With industry conditions slowly improving in Western Canada, and with larger and more complex frac jobs becoming the norm, Dale Dusterhoft, Trican's president and CEO, said the timing was perfect to enact the deal and create a larger more prolific entity.

The combined company will boast 675,000 hydraulic horsepower of available fracturing capacity, a leading footprint of service bases across Western Canada and a complementary suite of products and services across cementing, coiled tubing, nitrogen, industrial services and fluid management.

JuneWarren-Nickle's Energy Group

Wells Rig Released

By Stephen Marsters

Bulletin records show there were 854 wells rig released in February, excluding experimental holes, compared to 435 in February 2016, an increase of 96 per cent.

The two-month total for this year is up 81 per cent to 1,673 wells rig released versus 925 wells in January-February 2016.

There was also in increase in total metres drilled over the first two months of the year. Operators finished 4.37 million metres of hole (excluding experimental wells), an increase of about 78 per cent from 2.46 million metres in the comparable period last year.

In Alberta, 434 wells were rig released in February compared to 201 in 2016 (up 116 per cent). Over the first two months, 859 wells were rig released, up 102 per cent from 426 in January-February 2016.

There were 553 wells rig released in Alberta in January-February 2017 with oil (421) or bitumen (132) as an objective, compared to 173 wells rig released last year with oil (114) or bitumen (59) as an objective.

There were 249 wells rig released in Alberta with gas or CBM as an objective over the first two months of the year compared to 160 in 2016.

A total of 2.53 million metres were drilled in Alberta to the end of February, up 106 per cent from 1.23 million metres in the comparable period a year ago.

Operators working in Saskatchewan rig released 323 wells in February compared to 164 drilled in February 2016, and bringing the two-month tally to 624 wells, up 71 per cent from 364 wells in last year's January-February period.

In Saskatchewan, 553 of the wells rig released to the end of February had oil as an objective, up from 352 last year. No gas wells were rig released in the first two months of 2016 or 2017.

Producers drilled 1.21 million metres of hole in Saskatchewan to the end of February compared to 749,673 metres a year ago (up 62 per cent).

In British Columbia, operators drilled 61 wells in February compared to 50 a year ago (up 22 per cent). Over the first two months of 2017, there have been 117 wells rig released in the province, an increase of 29 per cent from 91 wells drilled in the comparable period in 2016.

BC operators rig released 485,791 metres to the end of February, compared with 357,341 metres a year ago (up 36 per cent).

Manitoba saw a 71 per cent decrease in rig releases to the end of February, as 70 wells were drilled versus 41 a year ago. For February, 35 wells were drilled in the province compared to 19 in February 2016 (up 84 per cent). Producers in the province drilled 129,467 metres in January-February 2017 compared to 77,435 metres a year ago (up 67 per cent).

Many of the wells drilled last year are still under confidential status, but 82.67 per cent were listed as oil or bitumen wells. That compared to 59.52 per cent listed as oil or bitumen wells in 2016.

Meanwhile, 12.38 per cent of the wells with a reporting status were listed as gas wells, down from 24.04 per cent in 2016.

In Western and Northern Canada, 4.36 million metres of development and experimental hole were drilled to the end of February, up from 2.46 million metres last year. The total average length of wells rig released in Western and Northern Canada declined slightly to 2,604 metres over the January-February period compared to 2,613 metres last year.

Rig release counts, including experimental wells

Operators drilled 2,076 wells to the end of February, including experimental wells, an increase of 48 per cent from 1,402 wells rig released in the year-prior period.

In February, producers drilled 1,066 wells, including experimental holes, up 55 per cent from 688 a year ago.

There were 941 wells rig released in Alberta in January-February 2017 with oil (422) or bitumen (519) as an objective, compared to 601 wells rig released last year with oil (114) or bitumen (487) as an objective.

JuneWarren-Nickle's Energy Group

Cenovus-ConocoPhillips Deal

By Pat Roche

Cenovus Energy Inc.'s deal to buy oilsands and Deep Basin assets from ConocoPhillips Company ranks as one of the biggest transactions in Canadian oil and gas history.

Calgary-based Cenovus has agreed to pay $17.7 billion for the Houston-based producer's 50 per cent stake in the Foster Creek/Christina Lake oilsands assets and the majority of ConocoPhillips's Deep Basin properties in Alberta and British Columbia.

To put this deal in perspective, the 2002 merger of PanCanadian Petroleum Limited and AlbertaEnergy Company Ltd. that created Encana Corporation (from which Cenovus was later spun off) was only $15.9 billion, according to Sayer Energy Advisors data.

Only three merger and acquisition transactions were bigger in the nearly 30 years Sayer Energy Advisors has been compiling statistics, said Sayer president Alan Tambosso.

The three bigger deals are the 2009 Suncor Energy Inc. acquisition of Petro-Canada ($27.7 billion), CNOOC Limited's 2012 takeover of Nexen Inc. ($22.8 billion) and Repsol S.A.'s 2014 purchase of Talisman Energy Inc. ($18.1 billion).

The deal comes on the heels of another huge vote of confidence in the oilsands by a Canadian producer.

On March 9, Canadian Natural Resources Limited agreed to pay $12.7 billion to buy oilsands assets and related infrastructure from Royal Dutch Shell plc and Marathon Oil Corporation.

CNRL's blockbuster deal is expected to close in mid-2017. It will push CNRL, already the biggest oil and gas producer in Canada by boe, over the million-boe-a-day threshold. No other Canadian producer has even come close to that major milestone.

This will make Cenovus Canada's biggest thermal oil operator by a wide margin. In second place is Imperial Oil Limited whose Cold Lake thermal bitumen production averaged 159,000 bbls a day in the fourth quarter of 2016. (Imperial may also have some thermal production from small-scale projects.)

Acquiring full interest in FCCL will transform Canada's largest SAGD operator into the country's largest SAGD owner.

JuneWarren-Nickle's Energy Group