Blackbird Energy Inc. Provides Initial Production Results from its Condensate-Rich Pipestone/Elmworth Montney Play

Blackbird Energy Inc. Provides Initial Production Results from its Condensate-Rich Pipestone/Elmworth Montney Play

January 9, 2018

January 9, 2018 - Calgary, Alberta (TSX-V: BBI) Blackbird Energy Inc. (“Blackbird” or the “Company”) is pleased to provide initial production results from three new development wells on its condensate-rich Pipestone/Elmworth Montney play, announce the completion of its planned delineation program and provide its preliminary 2018 outlook.

“A key focus for Blackbird in 2017 was the continued application of high intensity completions to our wells on the Pipestone/Elmworth corridor. Our objective in pushing the limits on completion intensity has been to prove elevated higher-valued condensate cuts and enhance liquids recoveries through the life of our wells. We are very encouraged by early stage condensate production from our wells, and believe completing longer-extended reach wells with more proppant and more stages will enhance our economics. We look forward to continuing the delineation of our condensate-rich Pipestone/Elmworth Montney play through both extended production data and preliminary results from new wells being tested or brought on production in 2018” commented Garth Braun, President, Chief Executive Officer and Chairman of Blackbird.

Initial Production Results

Blackbird is pleased to announce that its total corporate December sales production averaged an estimated 1,972 boe/d (55% liquids), with production online for 28 of a possible 31 days through the month.

Consistent run times through December allowed Blackbird to collect initial 30-day production (IP30) data from three of its most recent development wells, as detailed below:

Well IP30(1)(2)(3)(4)
Condensate
(bbl/d)
Natural Gas
(mcf/d)
NGLs
(bbl/d)
CGR(5)
(bbls/mmcf)
Total
(boe/d)
% Load Water Recovered(6) Lateral Length
(meters)
02/6-26-70W6
(Upper Montney)
475 1,076 20 460 674 37% 2,103
2-28-70-7W6
(Middle Montney)
300 1,881 24 172 636 24% 1,977
15-21-70-7W6
(Upper Montney)
289 1,424 18 216 543 14% 1,300

1) Production from these wells has been restricted at times due to third party processing capacity limitations and water injection limitations.
2) Numbers may not add due to rounding.
3) All disclosed production rates and volumes are presented net of any load water.
4) All volumes are based on field estimated production data.
5) CGR includes condensate and NGL production.
6) Load water is not included in any of the other volumes reported.

Well Peak 48 Hour Rate During Initial 30-day Production Period(1)(2)(3)(4)
Condensate
(bbl/d)
Natural Gas
(mcf/d)
NGLs
(bbl/d)
CGR(5)
(bbls/mmcf)
Total
(boe/d)
Lateral Length
(meters)
02/6-26-70W6
(Upper Montney)
701 1,221 21 591 924 2,103
2-28-70-7W6
(Middle Montney)
412 1,728 22 251 721 1,977
15-21-70-7W6
(Upper Montney)
421 1,724 22 257 729 1,300

1) Production from these wells has been restricted at times due to third party processing capacity limitations and water injection limitations.
2) Numbers may not add due to rounding.
3) All disclosed production rates and volumes are presented net of any load water.
4) All volumes are based on field estimated production data.
5) CGR includes condensate and NGL production.

The Company cautions that initial production and short-term peak rates are not necessarily indicative of long-term well or reservoir performance or of ultimate recovery. Such rates are preliminary in nature and may not be representative of stabilized on-stream production rates. Actual results will differ from those realized during a short term initial production or peak measurement period, and the difference may be material.

02/6-26-70-7W6 Upper Montney Development Well

The 02/6-26-70W6 Upper Montney Development well was brought on-stream in late September. The well was drilled to a total depth of 4,808 meters with a lateral of 2,103 meters and completed over 42 intervals using a combination of the STAGE Generation Four Sleeve System and Plug and Perf. Approximately 3,193 tonnes of sand was placed representing a completion intensity of approximately 1.5 tonnes per meter. Over its initial 30 days on production the well produced at an average rate of 674 boe/d including 475 bbl/d of condensate. At the end of the 30 day period the well had recovered approximately 37% of load frac water.

2-28-70-7W6 Middle Montney Development Well

The 2-28-70-7W6 Middle Montney Development well was brought on-stream in mid-November. The well was drilled to a total depth of 4,942 meters with a lateral of 1,977 meters and completed over 46 intervals using the STAGE Generation Four Sleeve System. Approximately 3,521 tonnes of sand was placed representing a completion intensity of approximately 1.8 tonnes per meter. Over its initial 30 days on production the well produced at an average rate of 636 boe/d including 300 bbl/d of condensate. At the end of the 30 day period the well had recovered approximately 24% of load frac water.

15-21-70-7W6 Upper Montney Development Well

The 15-21-70-7W6 Upper Montney Development well was brought on-stream in mid-November. The well was drilled to a total depth of 4,120 meters with a lateral of 1,300 meters and was re-fractured in 24 stages with four to five intervals per stage for a total of 108 intervals using Plug and Perf. Approximately 3,170 tonnes of sand was placed representing a completion intensity of approximately 2.4 tonnes per meter. Over its initial 30 days on production the well produced at an average rate of 543 boe/d including 289 bbl/d of condensate. At the end of the 30 day period the well had recovered approximately 14% of load frac water.

2018 Outlook

Given the nature of the Company’s future commitments, Blackbird’s capital obligations in the first half of 2018 will be limited. Activity is expected to accelerate in the second half of 2018 as the Company prepares to meet previously-disclosed future processing commitments. Blackbird is in a strong financial position and as at October 31, 2017 the Company had positive working capital of approximately $21.3 million. Blackbird continues to evaluate a number of non-dilutive options available to facilitate future growth and development, including access to an expanded credit facility. Additionally, with improved run times Blackbird anticipates to benefit from a more meaningful and consistent stream of revenues from its producing assets.

The Company expects to have early production results from four additional wells before the end of March, including test data from its recently completed 3-27-71-7W6 Upper Montney Northern Delineation well (surface location 6-33-71-7W6) as well as its 2-20-70-6W6 Middle Montney Development well, which is more than 5 kilometers east of Blackbird's previous development drilling. If successful, the Company believes that these wells would further validate Blackbird’s economic multi-interval drilling inventory outside current proved plus probable reserve bookings.

About Blackbird

Blackbird Energy Inc. is a highly innovative oil and gas exploration and development company focused on the condensate and liquids-rich Montney fairway at Elmworth, near Grande Prairie, Alberta.

For more information, please view our Corporate Presentation at www.blackbirdenergyinc.com or contact:

Blackbird Energy Inc.
Garth Braun
Chairman, CEO, and President
(403) 500-5550
gbraun@blackbirdenergyinc.com

Allan Dixon
Manager, Business Development
(403) 699-9929 Ext. 103
adixon@blackbirdenergyinc.com

Advisories

Forward-Looking Statements

This news release contains certain statements ("forward-looking statements") that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future results or events, are based upon internal plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those indicated or suggested therein. All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are typically, but not always, identified by words such as "anticipate", "continue", "estimate", "expect", "intend", "may", "will", "should", "believe", "plan", "objective", "potential" and similar or other expressions indicating or suggesting future results or events.

Forward-looking statements are not promises of future outcomes. There can be no assurance that the results or events indicated or suggested by the forward-looking statements, or the plans, intentions, expectations or beliefs contained therein or upon which they are based, are correct or will in fact occur or be realized (or if they do, what benefits the Company may derive therefrom).

In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to: Blackbird's objective of proving elevated condensate cuts and enhanced liquids recoveries through completion intensity; expectations for enhanced economics from longer wells with more proppant and stages; continued delineation of the Company’s Pipestone/Elmworth Montney play; expected capital activity in 2018, including limited obligations in the first half and accelerated activity in the second half; future financing activity, including continued evaluation of an expanded credit facility and other non-dilutive options; scale and consistency of future revenue streams from producing assets; expected timing for early production results from additional wells; and validation of drilling inventory outside of current reserves bookings.

With respect to the forward-looking statements contained in this news release, Blackbird has assessed material factors and made assumptions regarding, among other things: future commodity prices and currency exchange rates, including consistency of future oil, NGLs and natural gas prices with current commodity price forecasts; the Company's continued ability to obtain qualified staff and equipment in a timely and cost-efficient manner; infrastructure and facility design concepts that have been applied by the Company elsewhere in its Pipestone / Elmworth Project may be successfully applied to the properties; the predictability of future results based on past and current experience; the predictability and consistency of the legislative and regulatory regime governing royalties, taxes, environmental matters and oil and gas operations, both provincially and federally; the Company's ability to market production of oil, NGLs and natural gas successfully to customers; the timing and success of drilling and completion activities (and the extent to which the results thereof meet expectations); the Company's future production levels and amount of future capital investment, and their consistency with the Company's current development plans and budget; future capital expenditure requirements and the sufficiency thereof to achieve the Company’s objectives; the successful application of drilling and completion technology and processes; the applicability of new technologies for recovery and production of the Company's reserves and other resources, and their ability to improve capital and operational efficiencies in the future; the recoverability of the Company's reserves and other resources; the Company’s ability to economically produce oil and gas from its properties and the timing and cost to do so; the performance of both new and existing wells; future cash flows from production; future sources of funding for the Company's capital program; the Company's future debt levels; geological and engineering estimates in respect of the Company's reserves and other resources; the accuracy of geological and geophysical data and the interpretation thereof; the geography of the areas in which the Company conducts exploration and development activities; the timely receipt of required regulatory approvals;; the access, economic, regulatory and physical limitations to which the Company may be subject from time to time; the impact of competition on the Company; and the Company's ability to obtain external financing when required and on acceptable terms.

The forward-looking statements contained herein reflect management's current views, but the assessments and assumptions upon which they are based may prove to be incorrect. Although Blackbird believes that its underlying assessments and assumptions are reasonable based on currently available information, undue reliance should not be placed on forward-looking statements, which are inherently uncertain, depend upon the accuracy of such assessments and assumptions, and are subject to known and unknown risks, uncertainties and other factors, both general and specific, many of which are beyond the Company's control, that that may cause actual results or events to differ materially from those indicated or suggested in the forward-looking information and statements. Such risks, uncertainties and other factors are discussed in the Company’s current annual information form , annual and interim management’s discussion and analysis, and other documents filed by it from time to time with securities regulatory authorities in Canada, copies of which are available electronically on SEDAR at www.sedar.com, and include, but are not limited to: volatility in market prices and demand for oil, NGLs and natural gas and hedging activities related thereto; general economic, business and industryconditions; variance of the Company's actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms; risks related to the exploration, development and production of oil and natural gas reserves and resources; negative public perception of oil and natural gas development and transportation, hydraulic fracturing and fossil fuels; actions by governmental authorities, including changes in government regulation, royalties and taxation; potential legislative and regulatory changes; the rescission, or amendment to the conditions of, groundwater licenses of the Company; management of the Company's growth; the ability to successfully identify and make attractive acquisitions, joint ventures or investments, or successfully integrate future acquisitions or businesses; the availability, cost or shortage of rigs, equipment, raw materials, supplies or qualified personnel; adoption or modification of climate change legislation by governments; the absence or loss of key employees; uncertainty associated with estimates of oil, NGLs and natural gas reserves and resources and the variance of such estimates from actual future production; dependence upon compressors, gathering lines, pipelines and other facilities, certain of which the Company does not control; the ability to satisfy obligations under the Company's firm commitment transportation arrangements; the uncertainties related to the Company's identified drilling locations; the high-risk nature of successfully stimulating well productivity and drilling for and producing oil, NGLs and natural gas; operating hazards and uninsured risks; the possibility that the Company's drilling activities may encounter sour gas; execution risks associated with the Company's business plan; failure to acquire or develop replacement reserves; the concentration of the Company's assets in the Pipestone / Elmworth Project area; unforeseen title defects; aboriginal claims; failure to accurately estimate abandonment and reclamation costs; development and exploratory drilling efforts and well operations may not be profitable or achieve the targeted return; horizontal drilling and completion technique risks and failure of drilling results to meet expectations for reserves or production; limited intellectual property protection for operating practices and dependence on employees and contractors; third-party claims regarding the Company's right to use technology and equipment; expiry of certain leases for the undeveloped leasehold acreage in the near future; failure to realize the anticipated benefits of acquisitions or dispositions; failure of properties currently held or acquired in the future to produce as projected and inability to accurately determine reserve and resource potential, identify liabilities associated with acquired properties or obtain protection from sellers against such liabilities; changes in the application, interpretation and enforcement of applicable laws and regulations; restrictions on drilling intended to protect certain species of wildlife; potential conflicts of interests; actual results differing materially from management estimates and assumptions; seasonality of the Company's activities and the Canadian oil and gas industry; alternatives to and changing demand for petroleum products; extensive competition in the Company's industry; lower oil, NGLs and natural gas prices and higher costs; failure of 2D and 3D seismic data used by the Company to accurately identify the presence of oil and natural gas; risks relating to commodity price hedging instruments; terrorist attacks or armed conflict; cyber security risks, loss of information and computer systems; inability to dispose of non-strategic assets on attractive terms; security deposits required under provincial liability management programs; reassessment by taxing authorities of the Company's prior transactions and filings; variations in foreign exchange rates and interest rates; third-party credit risk including risk associated with counterparties in risk management activities related to commodity prices and foreign exchange rates; sufficiency of insurance policies; potential litigation; variation in future calculations of non-IFRS measures; sufficiency of internal controls; breach of agreements by counterparties and potential enforceability issues in contracts; impact of expansion into new activities on risk exposure; inability of the Company to respond quickly to competitive pressures; and the risks related to the common shares and warrants that are publicly traded. This list is not exhaustive.

The forward-looking statements contained in this news release are made as of the date hereof and Blackbird assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. All forward-looking statements herein are expressly qualified by this advisory.

Oil and Gas Measures

This news release discloses certain production information on a barrels of oil equivalent ("boe") basis with natural gas converted to barrels of oil equivalent using a conversion factor of six thousand cubic feet of gas to one barrel of oil (6:1). Condensate and other NGLs are converted to boes at a ratio of 1 bbl:1 bbl. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based roughly on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the Company's sales point. Although the 6:1 conversion ratio is an industry accepted norm, it is not reflective of price or market value differentials between product types. Based on current commodity prices, the value ratio between crude oil and natural gas is significantly different from the 6:1 energy equivalency ratio. Accordingly, using a conversion ratio of 6 mcf:1 bbl may be misleading as an indication of value.

THE TSX VENTURE EXCHANGE INC. HAS NEITHER APPROVED NOR DISAPPROVED THE CONTENTS OF THIS PRESS RELEASE. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

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