The research firm noted the “tremendous potential” of Pulse’s Bigoray EOR project as the reason for maintaining the rating and held steady with a price target of C$0.50.
The Calgary-based oil company worked with Schlumberger Canada Ltd to complete the company’s petrochemical modeling study geared towards increasing oil recovery from the Biogray Niksu D and E pools.
The resulting detailed simulations allowed the company to position the solvent injectors in the most efficient locations on the wells, as well as model the pressures and rates of fluids to maximize recovery.
Pulse ultimately decided on a simulation that puts a peak estimated production rate at Niksu D of approximately 2,000 barrels of oil per day and increasing to 5,000 when Niksu E is included in the model.
In this scenario, Nisku D would begin production and generate cash flow, while the E-pool would follow three years later. Subject to sufficient capital, Pulse has the option to accelerate the EOR program at Nisku E to coincide with development at the D pool.
Forecast production would peak within two years of EOR implementation and continue for approximately 10 years, with a cooldown period estimated to continue for another 10 to 20 years afterwards.
“The results of the geological modeling combined with the encouraging results of the two recently drilled Bigoray wells increases our confidence of the large potential production and cash flow potential that could be generated from the successful implementation of the EOR program,” wrote Mackie analyst Bill Newman.
“We reiterate our ‘Speculative Buy’ recommendation C$0.50 target price on the near term production potential from the current drilling programs, and the massive upside potential from the miscible flood EOR project at Bigoray,” Newman noted.
Shares of Pulse gained 3.1% to C$0.17 on Thursday afternoon in Toronto.
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