Petronas West Gundy Asset Review – BOE Intel | BOE Report (2024)

When you think of major Montney producers, a few names likely come to mind: Tourmaline, Shell, ARC Resources and so on. With today’s Asset Review article, we wanted to focus on a multinational energy company operating one of the largest joint ventures in the BC Montney: Petronas. In particular, we wanted to narrow in on the company’s contiguous rights position at the southwest corner of its asset base, which is concentrated northwest of Fort St. John, BC. A relatively small portion of the company’s current position and production base, this area caught our attention on account of 10 significant new wells (the company’s first wells in the area to come on production in years) that now have a full month of production data available. For the purposes of this article, we are treating Petronas’ contiguous land position covering the area from Township D/094-B-16 to I/094-B-09 as the West Gundy asset. We are not aware of Petronas’ official name for this asset, but what we call “West Gundy” may in fact be composed of multiple assets that the company views as being distinct, or perhaps it is considered a smaller portion of a larger asset. Regardless, we believe that this producing area at the western frontier of Petronas’ Canadian asset base is worth a deeper look.

Petronas Montney Overview

Petronas’ only Canadian producing operation is the North Montney Joint Venture (NMJV), which is owned jointly by PETRONAS Canada, Brunei Energy Services & Trading Sdn Bhd (BEST), Indian Oil Corporation Ltd. (IndianOil) and China Petroleum & Chemical Corporation (Sinopec Corp). The NMJV was formed from assets originally built up by Progress Energy between 2001 and 2010 before Petronas got involved in 2011. Since acquiring outright control of the assets in 2012, Petronas Canada has steadily built up both its reserves and its infrastructure base in the Montney.

Since July 2020, Petronas Canada’s gross licensed production has increased by 80.1%, from around 96,000 BOE/d to around 174,000 BOE/d. The company has spud 98 licences in the past 12 months, 14 of which were spud in the past 3 months. This growth appears to have been largely organic; our data suggests that the company has not been the recipient of any significant mineral rights or licence transfers in the past 2 years.

West Gundy

Narrowing in on West Gundy and the surrounding area, we note that there are 3 companies with established operations. CNRL, Tourmaline and Petronas Canada all have mature production near Gundy, with Petronas’ project being the smallest. We want to point out that CNRL and Tourmaline’s nearby projects are substantial, suggesting that there is potential for future ramp up for Petronas at West Gundy. Petronas’ asset didn’t see much action until 2010, with the 5 wells spud before 2010 mostly serving as exploratory endeavours. Development began in earnest in 2010, however, with the 3 companies steadily building up their producing and infrastructure capacity in the following 14 years. Of Petronas’ 902 total producing wells, 10 are at West Gundy.

Petronas has demonstrated renewed interest in the asset in the past 12 months. After having not spud a single well between 2016 and 2022, the company spud 11 wells at West Gundy in 2023, the most in any year apart from 2015. These wells were part of a single well pad at Township J/094-B-09. The 2023 spuds stand out from other West Gundy wells on account of their length; the 2023 spuds have an average true measured depth (TMD) of 20,800 feet, compared to 11,878 feet for the 2015 spuds. This may suggest that the company is utilizing enhanced technological capabilities in order to generate more production from a single wellbore, fundamentally altering the economics of wells drilled at West Gundy.

With respect to production, the data we’re interested in is from the 2023 spuds. With only one or two months of production data available for each well, we’re still in the early stages of the production lifecycles for these licences and peak production may not yet have been achieved. Having said that, the early numbers are noteworthy. In April 2024, the 10 producing 2023 spuds accounted for a combined total of just under 9,500 BOE/d. This production had a healthy liquids component, which stood at around 22% of overall production in April 2024. We’ve prepared a table summarizing production data for Petronas’ top 5 producing wells by April 2024 production at West Gundy. The top well, 202A058I094B0900, produced just under 1,600 BOE/d with a 24% liquids portion.

In looking at maps of West Gundy, it is impossible not to notice the untouched western portions of the company’s rights ownership position. With that said, it does appear as if this asset is on the far-western border of what has currently been delineated by industry in the Montney. As such, it’s unclear whether the company will leverage the full geography of its crown mineral rights position at West Gundy. In assessing the company’s pipeline and facility infrastructure, we note that the company has developed an extensive network of midstream assets. The pipelines, in particular, are well-integrated for production egress from the company’s existing wells. As such, it’s possible that future development in the region will take place near existing developments, particularly if the wells that have come on production in 2024 maintain their productivity.

To keep tabs on West Gundy and other Montney assets, check out BOE Intel.