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Delphi Energy says Montney drilling a big success so far

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Delphi Energy (TSE:DEE) detailed late Thursday the successes of its Montney drilling program at Bigstone northwest of Edmonton, Alberta, putting it on track to meet its annual production guidance of 10,000 to 10,500 barrels of oil equivalent per day (boe/d).

The company, in an operations update released late yesterday, said is successfully completed its sixth Montney horizontal well of the year in East Bigstone, with the well currently being equipped to produce and expected to come on stream in the next two weeks.

It also finished drilling its seventh Montney well of 2014, with completion operations set to begin in the next two weeks, while it has started drilling at its eighth Montney well. 

Since February of this year, Delphi has brought on stream 10 Montney horizontal wells, three of which have achieved payout, with another three expected to reach payout by year-end.

In September, corporate production averaged about 11,000 boe/d with production from the Montney formation at East Bigstone averaging about 7,700 boe/d, an 11-fold increase from 700 boe/d in February. The company spent $143 million on drilling, completions and infrastructure at East Bigstone from February to September.

It generated cash operating income from the Montney production of $6.2 million last month, equivalent to an annual run rate of $75 million, Delphi said.

The company recently acquired eight gross sections of Montney rights directly offsetting its current Montney production for $8.8 million, and closed the $9.0 million West Bigstone acquisition of approximately 430 boe/d.

The Western Canada-focused oil producer has also been disposing of its properties, with certain interests from its Hythe asset sold for total proceeds of $16 million. The company said it has decided not to sell its Wapiti assets at this time, as the potential buyer was unable to act within the terms of the letter of intent, which expired on October 9. The assets will remain one of the company's core areas.

For the fourth quarter, Delphi is forecasting average production of 11,200 to 11,500 boe/d, representing a 26 percent increase over the same quarter last year. It said third quarter production was roughly 9,500 boe/d, based on field estimates.

The company's production was curtailed in August due to repairs to a third party natural gas liquids pipeline and scheduled gas plant maintenance at its Wapiti property last month.

Shares of Delphi were down 2.9 percent at C$2.32 in Toronto on Friday.

Quick facts: Delphi Energy

Price: 0.35 CAD

TSX:DEE
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Market Cap: $8.41 m
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