Investors
Investing in Progress Energy is an investment in arguably the strongest play on the most compelling natural gas trend in the Western Canada Sedimentary Basin. Progress is by far the largest leaseholder in the Montney fairway, with nearly double the acreage of its nearest competitor.
Progress has been successful in leasing some 900,000 acres of deep rights on high-potential Montney lands and the results of our drilling to date compare favourably with the most prolific shale gas plays in the United States and Canada.
Cores from our Montney wells show pay zones are consistently 300 metres thick and wells are highly responsive to horizontal drilling and multi-zone formation fracturing.
With this knowledge in hand, we’re proceeding on two fronts:
- Drilling our best prospects according to a low-cost production plan
- Making significant parcels of land available for joint ventures that will bring in immediate capital for reinvestment and also fund most of the cost of initial development on JV properties, thereby accelerating exploitation.
Repeatability
The vast extent and consistency of the Montney formation holds important implications for development. These features mean that the formation can be most successfully exploited by repetitive procedures that are subject to continuous improvement to drive down costs.
This is why Progress has conceived a ‘pod’ system of development. Each pod is a group of 23 wells, designed to produce 50 MMcf/d and sustain this production level for a period of at least 10 years. Progress has estimated that it can double production to 100,000 boe/d within the next five years through consistent repetition of this pod system. Additionally, associated learning and the use of central processing facilities to serve several pods positions us to maximize production while driving down costs.
Gas Price
Progress acquired most of its Montney deep rights at modest costs before competitors recognized the Northern extent of the formation. Those acquisitions are now sunk costs and Progress is in a position to produce large volumes of gas from the Montney trend at very attractive rates of return. More importantly, we believe that macroeconomic factors will inevitably push upward on gas prices, and the full-cycle costs of developing new gas fields will be reflected in higher natural gas prices in North America.
On the demand side, gas is a low-carbon fuel and its proven abundance in North America makes it the logical choice for the next generation of electricity generation facilities. Gas-fired power plants can easily be sited near end-users to eliminate the need for transmission corridors, while the advent of electric cars will increase the need for clean power. The export of natural gas from North America via LNG is increasingly likely, and we feel that Progress stands to benefit from west coast export facilities.