Canada’s Peyto Still Drilling, Despite Challenges
Despite challenges related to weather, the Covid-19 pandemic and general upheaval in global energy commodity markets, Canadian Deep Basin natural gas producer Peyto Exploration & Development said June 29 it has continued development work through Q2 2020, sustained by “long life, low cost natural gas assets that deliver industry leading operating margins.”
Spring break-up conditions in Peyto’s main operating area around Edson, in the west-central part of Alberta, were unusually wet, due to above-normal snowfall and colder than normal winter temperatures that drove frost deep into the ground, the company said in an operations update.
Still, the company was able to drill 11 new wells (10.3 net), complete eight wells and bring nine wells on-line during the second quarter, with five wells drilled but not yet completed. Combined with Q1 field work, Peyto has added 65mn ft3/day of natural gas and 1,700 b/d of natural gas liquids to its production profile so far this year.
Drilling and completion costs in Q2 have averaged 10% less than in Q1, despite added costs related to the wet spring, and Peyto is targeting additional cost savings of 10-15% through the balance of this year.
“These combined savings are expected to directly translate into reduced cost to add new production and reserves,” the company said.
Now half-way through its 2020 capital program, which is expected to range between C$200mn (US$147mn) and C$250mn, Peyto is anticipating drilling, completing and bringing onstream 45-60 new wells and adding about 2,000 km to its gas gathering network this year, adding “meaningful supply” for its 845mn ft3/day of processing facilities.