Vermilion’s Canadian production and assets are focused in West Pembina near Drayton Valley, Alberta and the Northgate area in southeast Saskatchewan.
Vermilion’s geographically advantaged Alberta assets feature the potential for three significant resource plays sharing the same surface infrastructure in the West Pembina region in Alberta:
We expect Canadian cash flows to be fully sheltered from cash taxes for the next 10+ years.
Vermilion holds a dominant 90,000 net acre land position in the West Pembina Cardium resource play. The play is a light oil development project employing horizontal wells with multistage completions. We control key infrastructure including a 15,000 bbl per day oil battery that we commissioned in 2011 to process the ongoing volumes associated with the development of the play, as well as two owned and operated gas plants.
Vermilion began actively developing the Cardium play in 2010 and through 2016 has drilled more than 200 wells. Throughout this development cycle, we have made significant strides in improving play economics by working closely with service providers, changing completion methodology from hydrocarbon based-fractures to water-based fractures and drilling longer reach wells. Vermilion still holds a significant inventory of undrilled prospects in reserves and resources.
The Mannville play is a multizone development that occurs at depths of approximately 2,400 metres to 2,700 metres. We hold over 220,000 net acres of Mannville rights, which are largely held by production. Our land position includes condensate-rich Mannville acreage around the Drayton Valley area as well as high-productivity, liquids-rich gas acreage near Ferrier. Since starting development of the Mannville play in 2013, we have only drilled a small portion of our Mannville inventory, providing us with significant future growth potential.
Vermilion entered southeast Saskatchewan through the acquisition of a private company in April 2014 and we have subsequently added additional land. Our land base covers 65,000 net acres at an average working interest of approximately 91%. Much like our West Pembina area in Alberta, southeast Saskatchewan provides the opportunity for multizone development. Our primary target is the Mississippian Midale formation with secondary targets of the Mississippian Frobisher and Devonian Bakken/Three Forks.
Vermilion holds over 115,000 net acres in the Duvernay liquids-rich gas resource play. To date, we have drilled three vertical stratigraphic test wells and two (1.3 net) successful horizontal appraisal wells. The two horizontal appraisal wells both have measured depths of more than 4,700 meters and were completed with modern techniques utilizing horizontal hydraulic fracturing and included downhole microseismic monitoring. We anticipate that the production results and interpreted fracture geometries from the microseismic data on these appraisal wells will assist us in optimizing completions on future development-phase horizontal wells. Our Duvernay rights generally underlie our existing development rights, which creates the potential for infrastructure, operational, and timing advantages if we progress to full development of the Duvernay resource play. Although we do not anticipate investing capital in this play in 2017, we are continuing to monitor industry developments in well costs and completions.