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KAYBOB

Duvernay Light Oil Shale

Alberta's Duvernay Shal Basin: World Class Oil and Gas Resource Play

"The Duvernay holds the largest resource of unconventional crude oil and condensate in Canada" - National Energy Board report (September, 2017). 

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“The Duvernay formation is one of the most prospective liquids-rich shale plays in North America” - Jeff Gustavson, President Chevron Canada (November, 2017)

ALBERTA'S DUVERNAY: A WORLD CLASS RESOURCE PLAY

Duvernay Shale Formation

  • Duvernay shale gas-liquids-oil play primarily responsible for the largest land sales in the history of Alberta.

  • Greater Kaybob area is hot spot of land sales and drilling for Duvernay ($1.7+ Billion on Crown sales since December 2009).

  • Duvernay compared to Texas Eagle Ford Shale (presence of three hydrocarbon windows (oil /wet gas /dry gas) and large resource potential.

  • Canada Energy Regulator projects Duvernay marketable potential to produce at 76.6 Tcf gas, 6.3 billion bbls NGLs, 3.4 billion oil.

  • Duvernay ranked in top six largest plays in North America.

  • Ongoing industry development has de-risked the play, resulted in greatly reduced costs, optimized fracking techniques to vastly enhance rates, reserves and economics. The Duvernay is an established economic liquids rich resource play. Most drilling is occurring at Kaybob, where best reserves lie.

  • Area activity has spurred midstream infrastructure and egress for Gas/NGL/Oil sales

  • Bounty’s land lie in the Kaybob area of activity

THE  KAYBOB  DUVERNAY  PLAYERS 2021

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BOUNTY EAST KAYBOB DUVERNAY LANDS

  • Bounty is seeking a partner, or a strategic investor, in its Kaybob Duvernay Lands.

  • The 65.5 Sections (41,920 acres) of PNG Rights 100% is owned by Bounty, primarily intermediate term licenses expiring in 2021 and beyond, consisting of:

TWO CREEK / WINDFALL PACKAGE

65.5 sections (41,920 acres) in Light Oil Duvernay Window

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Bounty Developments Ltd. is seeking to transact on its Kaybob Duvernay Lands. Our preference would be to find a farm-in partner, but all proposals will be considered. The 65.5 Sections of PNG Rights 100% owned by Bounty, primarily intermediate term licenses, two land blocks:

KAYBOB TWO CREEKS/WINDFALL PACKAGE

  • 65.5 sections (41,920 acres) in Light Oil Duvernay Window

  • Nearby producing Duvernay wells drilled by Chevron and Murphy Oil

  • Established infrastructure

  • Estimated 0.86 Billion BOE6 in place in the Duvernay formation on Bounty Lands (88% oil and liquids); estimated recoverable 92-139 Million BOE6

  • 200 potential well locations (approx. depending on length and spacing)

  • Expected IP: 650-1000 BOEPD per well (88% oil and liquids)

VOLATILE OIL WINDOW - EAST KAYBOB DUVERNAY

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Premium Development Opportunity:

• Bounty’s lands sit within the desirable Volatile Oil Window of the Duvernay
• World-class shale oil offering

• Large undeveloped blocks offered; de-risked by offsetting wells

OFFSETTING COMPETITOR PRODUCTION

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SUMMARY

Bounty holds the last remaining large undeveloped land blocks of Kaybob Duvernay rights. The lands fit the criteria for a world-class shale project:

  • Development provides very favourable royalty terms: Flat 5% royalty per well until payout (completion costs plus average industry drill costs [C*costs]) and expected to average about 27% thereafter.

  • Operator Chevron has reported the Kaybob Duvernay play as “one of the most prospective liquids-rich shale plays in North America”(1) and it has been ranked as one of the top six largest plays in North America.

  • Industry reports that “Murphy’s Kaybob East condensate and oil wells top the chart...” (2) and “The high oil and condensate rates at Kaybob East/Two Creeks were the good news story for the Duvernay in...2020” (2)

  • Technological advancements in drilling / completions have increased recoveries and reduced well costs resulting in enhanced single well NPVs and RORs economics for Duvernay Horizontal Wells (EURs are 3 to 4 times 2013-14). Murphy now targeting 6.0-7.5MM$ cost per well for D&C.

  • Duvernay considered one of the marquee plays in Western Canada Sedimentary Basin, with extensive drilling activity (approx 800 horizontal wells at Kaybob), many projects moved to full development mode.

  • Offset operators (Chevron and Murphy) have drilled wells in similar maturity environment and net pay to Bounty lands. Offset wells have IP90 production of 350 to 1,400+ BOEPD. In 2020 Murphy drilled one of top 10 new oil wells as an offset well ( 1,133 bbl/d oil).

  • Duvernay shale resource can be developed efficiently and economically with consistent well results and enhanced rate of return.

  • Largely contiguous land, with sufficient critical mass for scale development (65.5 sections land and approximately 200 hz well locations).

  • 100% working interest ownership by Bounty.

  • Bounty lands at Kaybob (Two Creek/ Windfall) are among the best Duvernay in area, offsetting top tier

  • Duvernay rights. Neighbors include Chevron, Murphy Oil/Athabasca Oil Corp. and Crescent Point.

  • Numerous coreholes (including the 2 drilled by Bounty) have established a very large hydrocarbon resource on Bounty lands. New drills by Chevron and Murphy (as close as a mile) have de-risked Bounty lands and defined a region of profitable production development.

  • Acreage is geologically and petrophysically comparable to successful Duvernay project areas:

    • Thick pay and high liquids content, rich TOC and silica content with low water saturation

    • Brittle, porous rock with low clay content, low effective stress gradient and significant over pressuring

  • Bounty economics show exceptionally high NPVs and RORs attainable for single wells and on full field development. Significant potential investment leverage for participants wishing to divest after initial drilling program.

  • Area with established good year-round access, transportation and processing capacity.

  • Bounty is prepared to facilitate the buyer’s transition to operator by acting as temporary operator.

 

(1): Jeff Gustavson, President Chevron Canada (November 2017)
(2): Canadian Discovery: Discovery Digest article - “2020 Western Canada Year in Review: Duvernay” (Jan 13, 2021)

PROCESS AND CONTACT 

Additional data/confidential information will be made available to interested parties who sign a confidentiality agreement.

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A Farmout or JV Partner is preferred but all proposals or deal structures including a cash offer on all or some of the land will be considered. 

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For further information, and to make a proposal, contact Paul Clark, Manager, Land and Business Development, at 403-804 8735 (cell),  403-718-7427 (direct) or paulclark@bountydev.com.

ADVISORY

This document has been prepared solely for the purpose of introducing an opportunity to a prospective purchaser or joint venture partner. The information contained herein is based on various assumptions and interpretations and is not intended to be a representation or warranty to be relied upon by any party. Bounty Developments Ltd., its employees, agents and officers shall have no liability arising from any errors or omissions in the forgoing. It is intended that any party interested following up on this opportunity shall make and rely solely upon its own corporate, geological, geophysical, engineering, environmental, accounting, legal and financial investigations, analyses and interpretations relating thereto.

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