Spartan had an active first quarter in the field, with three rigs operating in southeast Saskatchewan and an additional rig drilling their 2017 Viking program in west central Saskatchewan. First quarter activity levels have been in line with budget and included 16.2 net open-hole, 8.0 net frac Midale, 14.5 net Viking wells. All wells were on production prior to the end of the quarter, with the exception of 9.0 net Viking wells and 3.0 net frac Midale wells which are scheduled to be completed and brought on production in the second quarter.
The company reported on April 4 that 2016 represented the most successful drilling program in the company鈥檚 history. Initial 90 day oil production rates (IP90) for our open-hole type wells exceeded their internal type curve by over 30 per cent and IP90 rates for frac Midale wells drilled at Alameda were approximately 23 per cent above type curve.
Spartan reported their first quarter 2017 drilling program has seen a continuation of 鈥渢hese excellent drilling results.鈥�
Thirteen (12.0 net) open-hole wells and 3 (3.0 net) frac Midale wells brought on production the first quarter have 30 days of production history. Initial 30 day production rates (IP30) for the open-hole wells averaged 159 barrels of oil per day (bpd), of which 62 per cent were above the company鈥檚 internal type curve. The IP30 rates for the frac Midale wells averaged 228 bpd (38 per cent above their internal type curve).
Spartan鈥檚 2016 drilling activity, as well as the accretive acquisitions the company completed during the year, have resulted in a significant increase to their drilling inventory in their core plays in southeast Saskatchewan. Spartan鈥檚 conventional Mississippian open-hole inventory (which includes the Frobisher, Midale, Tilston and Ratcliffe) currently stands at 1,469 (1,206 net) locations. Their unconventional tight oil inventory (frac Midale and Bakken) stands at 227 (212 net) locations. The experience Spartan gained successfully drilling these plays for the past three years and the extensive geological and geophysical work they have conducted have continually increased the company鈥檚 confidence in the overall depth and quality of their drilling inventory. Their press release noted, 鈥淥ur locations are supported by geology, core and DST - 2 - analysis and 3D seismic. Based on our 2017 forecast capital program, we maintain a drilling inventory of approximately 12 years in both our core open-hole and frac Midale plays.鈥�
Spartan鈥檚 largely conventional asset base delivers some of the best returns in the industry, it said in a release. 鈥淎n open hole Frobisher well that achieves our internal type curve generates rates of return in excess of 100 per cent and payouts of less than a year at WTI US$50 oil. Our frac Midale type curve also delivers attractive returns in excess of 75 per cent and payouts of less than 1.5 years at WTI US$50 oil.鈥�
Acquisition Update
The technical team continues to study and further evaluate the assets they acquired from ARC Resources Ltd. in December 2016. Spartan is in the process of licensing approximately 28 wells on the acquired assets, with drilling operations to commence in the third quarter, and have also completed a number of workovers on the properties. To date, base production from the acquired assets has outperformed Spartan鈥檚 budget expectations.
Unconventional Torquay
During the first quarter of 2017, Spartan has continued to expand its land position in the Torquay/Three Forks light oil resource play in southeast Saskatchewan. Currently, the corporation鈥檚 land holdings in this play consist of approximately 40 gross (31.5 net) net sections. During the first quarter, Spartan drilled 2 (0.8 net) Torquay wells (both non-operated). Industry activity continues to increase adjacent to their land holdings, de-risking its acreage, and Spartan plans to drill a further 3.0 net wells to test their Torquay resource in the second half of 2017.
With success, Spartan鈥檚 management believes that the Torquay/Three Forks could be a significant source of future growth for the corporation. Their press release noted, 鈥淲e have 160 (126 net) potential unrisked drilling locations (at 4 wells per section) that are prospective for Torquay/Three Forks production on our land base.鈥�
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