Macquarie Duvernay Shale Research Report

Transcription

Do the ‘Dew’vernay!
CANADA
Big liquids. Big costs. Big payoff.
Duvernay shales – Canada’s Eagle Ford
Over the next decade, we believe the Devonian-aged Duvernay shales will emerge
as one of the most promising oil/gas resource plays in Canada. In fact, we see these
shales as having the potential to be Canada’s answer to the prolific Eagle Ford
shales in south Texas. Eagle Ford producers, such as EOG Resources,
Chesapeake, Anadarko Petroleum, Petrohawk (now BHP) and Pioneer, have
significantly ramped up activity, moving the rig count in that area from essentially nil
in late 2009 to 140+ rigs today. In our view, the Duvernay shales are at the precipice
of being a timeless unconventional resource play, characterized by the right
geochemical, petrophysical, and mineralogical parameters.
Over C$1.4bn spent on land; Activity ramping up
Inside
Is the Duvernay Alberta’s Eagle Ford?
2
Geological overview
3
Duvernay land sales
10
Meet the players
15
Duvernay activity
18
Case study: Eagle Ford shales
21
Duvernay economics
25
Infrastructure
30
Valuation and conclusion
33
Appendices
35
Since late 2009, land sale activity for the Duvernay shales has gone into overdrive,
with over C$1.4bn spent to purchase more than 1.0m net acres of land throughout
Alberta. Unit prices since 2009 have averaged C$200-400/acre, with some land in
Pembina and Kaybob fetching nearly C$5,800/acre. From an activity standpoint,
there are currently 24 wells drilled or licensed to-date, including nine horizontals
across the greater Kaybob and Pembina regions. For 2011/2012, we anticipate
another 20+ wells to be drilled, with the most active producers being the Large Caps
(ie, Encana, Talisman, Husky, Chevron and ConocoPhillips).
Preliminary economics: contingent on costs and yields
Admittedly, with limited data, it is difficult to formulate a type curve of any certainty.
However, for our base case liquids rich gas Duvernay type curve, we assume an IP
rate of 4.2mmcf/d and liquids yield of 75bbl/mmcf, generating an EUR of
~805mboe/well (30% liquids). This type curve produces a reasonable before tax
NPV10 of C$8.7m, profit-investment ratio of 0.8x, and IRR of 46% based on a drill,
completion, and tie-in cost of C$11m and our long-term price deck of US$90/bbl
WTI, US$6.00/mmbtu Henry Hub, and US$0.95/C$. On an economic basis, the
Duvernay shales rank close to the Eagle Ford, Haynesville and Fayetteville.
Going extreme for the emerging Duvernay players
Ray Kwan, CFA
+1 403 539 4355
ray.kwan@macquarie.com
Chris Feltin
+1 403 539 8544
chris.feltin@macquarie.com
Cristina Lopez, CFA
+1 403 539 8542
cristina.lopez@macquarie.com
Ryan Mooney
+1 403 539 8514
ryan.mooney@macquarie.com
Charlene Liu, CFA
+1 403 539 4350
charlene.liu@macquarie.com
15 August 2011
Macquarie Capital Markets Canada Ltd.
Within our coverage universe, Talisman Energy (TLM CN) shows up as the most
leveraged Large Cap producer followed by Encana (ECA US). Among our high
yield/mid cap producers, we believe Athabasca (ATH CN), Daylight (DAY CN),
Celtic (CLT CN), Vero (VRO CN), Chinook (CKE CN), Bellatrix (BXE CN) and
Angle Energy (NGL CN) have the best exposure to the play. On the smaller cap
side, Delphi (DEE CN) has the highest leverage relative to its size, though we note
its lands are located in the unproven ‘oil window’ of the play. Outside our coverage
universe, we highlight Trilogy (TET CN), Mako Energy (MKE AU), Kilgore (KOG AU),
Sonde Resources (SOQ CN), Longview (LNV CN), Galleon (GO CN), Yoho (YO CN)
and Terra (TT CN).
Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our
website www.macquarie.com.au/disclosures.
Macquarie Research
Is the Duvernay Alberta’s Eagle Ford?
Over the next decade, we believe the Devonian-aged Duvernay shales will emerge as one of the
most promising oil/gas resource plays in Canada. In fact, we see these shales as having the
potential to be Canada’s answer to the prolific Eagle Ford shales in south Texas. Eagle Ford
producers, such as EOG Resources, Chesapeake, Anadarko Petroleum, Petrohawk (now BHP),
and Pioneer, have significantly ramped up activity, moving the rig count in that area from
essentially nil in late 2009 to 140+ rigs today. In our view, the Duvernay shales are at the
precipices of being a timeless unconventional resource play, characterized by the right
geochemical, petrophysical and mineralogical parameters.
Building on our initial October 2010 report, ‘Going Straight to the Source’, the purpose of this study
is to provide investors with a comprehensive look into the Duvernay resource play, with a particular
focus on the geology, activity, infrastructure, and economics. We have also provided a detailed
comparison between the Duvernay and Eagle Ford and the producers most exposed to the play.
Where is the play? Fig 1 is a regional map of the Duvernay/Muskwa trend in British Columbia
and Alberta. In Alberta, the sedimentary wedge is differentiated east of the Deformation Front and
west of the Grosmont (upper Leduc) Shelf Edge, including the major fringing Leduc reefs to the
north that demarks the Peace River Arch (PRA). The focus of our analysis is on the
unconventional Duvernay shales geographically defined southeast of the Peace River Arch and
northwest of the Rimbey–Meadowbrook Leduc trend in the West Shale Basin. From a geological
perspective, the Duvernay shales are considered to be correlative and time equivalent to the
Muskwa shales in northeast British Columbia and northwest Alberta. Industry nomenclature
standards dictate that anything north of the PRA is called ‘Muskwa’ shales while anything to the
south is called ‘Duvernay’ shales. We estimate the Duvernay shales stretch over ~100,000km2
across west central Alberta.
Fig 1
Duvernay/Muskwa shale distribution
Helmet
Zama
Zama
Steen
Rainbow
Chinchaga
Chinchaga
Glacier
Bison
Worsley
Red Earth
Brintnell
Sinclair
Steen
Rainbow
Bison
Worsley
Alberta
Helmet
Alberta
Red Earth
Peace River
Arch
Nipisi
Swan Hills
Karr
Rimbey Meadowbrook
Trend
Swan Hills
Karr
Kaybob
Kaybob
Simonette
Nipisi
Sunset
Sunset
Simonette
Windfall
Fir
Redwater
Pembina
Halkirk
Redwater
West Shale
East Shale
Basin
Basin Halkirk
Pine Creek
Pine Creek
Provost
Ansell
Lochend
Windfall
Fir
Drumheller
Suffield
Gladys
Medicine Hat
Provost
Ansell
Lochend
Drumheller
Suffield
Gladys
Medicine Hat
Penny
Penny
Coutts
Coutts
Source: geoSCOUT, Macquarie Research, August 2011
15 August 2011
2
Macquarie Research
Geological overview
Shale oil/gas generally refers to continuous, self-sourced resources contained in fine-grained,
organic rich, low permeability reservoirs. Oil or natural gas in these particular reservoirs can be
found as free gas/oil in the interstitial pore spacing/in-fracture spacing, or adsorbed in the
kerogen (organic material). The best quality shales can act as the source rock, seal, and even as
reservoir rock, representing a self-contained petroleum system.
The sweet spots to be determined. A myriad of factors determine whether a particular shale
play will be ultimately prospective for oil or gas. While pervasive over a large area, the Duvernay
shales are not created equal everywhere and vary in terms geochemical, petrophysical,
geological, and mineralogical factors (ie, lithology, mineralogy, total organic carbon, thermal
maturity, porosity/permeability, thickness, or depth). We believe an understanding of these
differences will help investors better identify the sweet spots of the play, and who is positioned
most appropriately.
Breaking down the Duvernay. The Devonian-aged Duvernay shales (~360Ma) are considered a
major source rock for a number of Upper Devonian Alberta oil and gas pools, which include the
prolific Leduc/Slave Point/Keg River reef and pinnacle pools. Total organic carbon (TOC) content
in some areas is up to 20%, which is a key indicator of hydrocarbon generation potential. The
Duvernay formation itself can be generally segregated into the base, middle, and upper
members: 1) the base or lower member is a 20m thick black argillaceous limestone; 2) the middle
member is generally a black shale consisting of skeletal reefal debris; and 3) the upper sequence
is considered to be a brown bituminous shale/argillaceous limestone, with thickness in the range
of >20m. We believe the base and middle members will ultimately be the most prospective target
of the Duvernay formation, given the skeletal reefal debris (ie, carbonate layers) contained within.
Fig 2
Stratigraphic column
Source: Alberta Geological Survey, Macquarie Research, August 2011
15 August 2011
3
Macquarie Research
Deposition. The Duvernay shale is part of the first five chronostratigraphic intervals in the
Devonian Woodbend Group, consisting of the Cooking Lake, Majeau Lake/Lower Leduc,
Duvernay/Middle Leduc, Lower Ireton/Upper Leduc, and Leduc intervals (see Fig 3). The
deposition of the Woodbend group is thought to be consisted of a rapid upbuilding phase of shelf
and reefal sediments followed by infilling of basinal areas by shale and marlstones. The Duvernay
sequence is generally represented by the ‘basinal infilling’ phase, followed by significant growth in
the Leduc reefs. All-in-all, the Duvernay shales are typically non-existent where the Leduc Reefs
are known to be present (see cross-section in Fig 4).
Fig 3
Stratigraphic cross section
Source: Alberta Geological Survey, Macquarie Research, August 2011
Reservoir. Given the early stage nature of this play, reservoir characteristics for the Duvernay
shales are very limited, though the data thus far appears encouraging. Specifically, in the Kaybob
region, the Duvernay shales are estimated to have porosities in the 3–12% range with matrix
permeabilities between 0.00001–0.01mD. Note that these permeabilities are similar to that of the
Eagle Ford shales in Texas, where the oil, wet gas and dry gas windows have all shown to be
productive in varying capacities.
From a mineralogical point of view, the Duvernay shales are not created equal and are in fact
quite variable. At Kaybob, the formation is dominantly quartz and calcite (~50–60%), with a clay
content between 15–25%. Elsewhere across the West/East Shale Basin, the mineralogy ranges
between 1–47wt% quartz, 18–90wt% carbonate, and 3–37wt% clay (see Figs 5, 17 and 18).
We would consider a quartz/carbonate (calcite) content greater than 40wt% combined with a clay
content less than 30wt% to be the desired mineralogical properties for an effective shale oil/gas
reservoir. Note that the higher the silica/carbonate content, the more brittle the rock, which is one
indicator of the ability for induced fractures to propagate in the reservoir.
Based on the composition data for other shale gas plays in the US (see Fig 6), we would surmise
that the Duvernay locally has mineralogical properties similar to the Lower Marcellus, Haynesville
and Eagle Ford. We note that this comparison is fairly loose given the data presented in Fig 6 is
calculated as a percent volume, while the data in Fig 5 is in percent weight.
15 August 2011
4
Macquarie Research
Fig 4
Duvernay-Leduc Reef cross-section
Ireton
formation
Leduc
Reef
Duvernay
formation
15 August 2011
5
Macquarie Research
Fig 5
Mineralogy: Duvernay cores per AGS/ERCB
Fig 6
100%
100%
90%
90%
80%
80%
70%
Volume (%)
70%
Weight (%)
Mineralogy: other US/Canadian shale plays
60%
50%
60%
50%
40%
40%
30%
30%
20%
20%
10%
10%
D12
Clay
D21
D22
D24
Barnett
Lower Marcellus
Eagle Ford
Muskwa
n
uo
r
C
la
y
O
ar
Haynesville
Fl
M
ite
Py
rit
e
om
ci
te
ag
Pl
Ks
p
Others
Ke
ro
ge
D11
Carbonate
ch
lo
r it
e
D10
Quartz
th
er
Ill
ite
/S
m
ec
tit
e
Ill
ite
/M
ic
a
D6
D
ol
D4
C
al
D1
Q
ua
rtz
0%
0%
Montney
Note: *designated well cores evaluated by the ERCB/AGS
Source: Core Laboratories (C. Hall, 2010), ERCB/AGS, Company Reports, Macquarie Research, August 2011
Thermal Maturity/Depth. We present the virtrinite reflectance (Ro) contour lines per the Geological
Survey of Canada (GSC) Open File 4341 in Fig 7. As a loose definition, between 0.6–1.0% Ro, the
shales are likely in the mature or oil generating window. A Ro between 1.0–1.6% suggests a
condensate-wet gas window, while a Ro greater than 1.6% typically indicates the shale unit is
generating dry gas (ie, Horn River Basin >2.0% Ro). Below 0.6% Ro, the shales are likely in the
immature window, suggesting insufficient thermal alteration to have generated hydrocarbons.
Immature shales can be damaged by drilling fluids and are often more ductile (less consolidated
or softer, generally not ideal for fracture treatments) because of the particular type of clay
contained within (ie, swelling or smectite clay). Note that the maturation distributions per the GSC
are fairly broad and actual micro-maturity characteristics are still to be articulated through future
drilling activity.
Interestingly, the thermal maturation contours correspond well with the depth of the Duvernay,
ie, the deeper the shales, the higher the degree of thermal alteration. In the Wild River-Kaybob
area, for instance, the depth of the targeted shale ranges from 3,200–3,800m. Heading north
towards Sturgeon Lake, we note the depth of the shales is shallower at 2,500–3,000m, which
suggests lower pressure and degree of alteration. In the greater Pembina region, the depth of
the Duvernay ranges between 2,500–4,000m.
Overpressured = more storage. The Duvernay interval is also normal-to-overpressured,
depending on the location (normal pressure is ~0.43psi/ft). A higher pressure gradient or
overpressured region generally translates into higher potential Original Gas in Place (OGIP) and
well deliverability, all else being equal. At Kaybob/Fir, for instance, the pressure gradient is over
2.0x normal (~0.83–0.96psi/ft). Heading north towards Ante Creek, we note that the gradient
drops precipitously to 0.53psi/ft (23% overpressured) and then falls to a normally-tounderpressured regime (~0.41psi/ft) at Sturgeon Lake. In the greater Pembina region, we have
one legacy well indicating a slightly overpressured regime (~10% overpressured) in the East
Shale Basin, just off the east side of the Rimbey–Meadowbrook Leduc trend
Given the lack of hydrodynamic data, we have provided for reference the Deep Basin edge in
Fig 7. In general, the Deep Basin can be broadly described as a region (typically Cretaceous
packages only) where regionally pressured water is characteristically found structurally updip of
underpressured gas.
15 August 2011
6
15 August 2011
Duvernay geological map – Rho, Depth, and Thickness
Source: GSC Open File 4341, geoSCOUT, Macquarie Research, August 2011
Fig 7
Macquarie Research
7
Macquarie Research
Thickness. Gross thickness of the Duvernay typically ranges between 10–70m. In proximity of
reef complexes, the Duvernay thickens to nearly 40–70m as a result of reefal ‘skeletal debris’
adding to the coarseness and brittle nature of the package. We believe this is an important
concept to remember, as the majority of the recent land sales have been near Leduc Reefs (ie,
near the Wild River sub-basin or near the Rimbey–Meadowbrook Trend in the greater Pembina
region). Note that away from the reefal complexes, particularly in the West Shale Basin,
thicknesses are less than 40m, which implies potentially lower gas or oil in place in comparison to
the shales near the Leduc Reefs, all else being equal.
Fig 8
Duvernay reservoir characteristics
Geological Age
Resource (bcfe/section)
Depth (m)
Porosity (%)
Total Organic Carbon (%)
Thickness (m)
Quartz (%)
Clay (%)
Pressure gradient (psi/ft)
Duvernay
Eagle Ford
Marcellus
Horn River
(Muskwa)
Barnett
Haynesville
Devonian
20-200
2,500-4,000
3-15%
1-20%
10-70
1-47%
3-37%
0.4-0.9
Cretaceous
100-210
1,830-3,658
6-14%
2-6%
30-90
5-20%
15-25%
0.5-0.7
Devonian
20-100
1,520-2,440
3-9%
3-14%
15-107
25-40%
20-35%
0.3-0.8
Devonian
200-300
2,740-3,960
3-7%
2-5%
60-150
55-80%
7-10%
0.5-0.7
Mississippian
50-200
1,825-2,750
3-9%
3-8%
90-150
40-60%
10-30%
0.5-0.6
Jurassic
100-250
3,500-4,270
6-15%
1-5%
45-105
20-35%
25-35%
0.7-0.9
Source: Core Labs (C. Hall, 2010), Company Reports, Macquarie Research, August 2011
Duvernay sweet spots – How do reservoir parameters impact OGIP? We present a tornado
diagram in Fig 9, which summarizes the impact of three key reservoir parameters that would have
on OGIP. We have given a range of values for pay, porosity and pressure for the Duvernay
interval. The vertical line down the middle visually projects the expected OGIP using the average
of all variables. That is, an average thickness of 37.5m, average porosity of 5% and reservoir
pressure of 6,600psi results in an expected OGIP per section of 45bcfe.
To estimate the impact of changing one of the variables, we hold the two others constant at the
average and adjust the parameter to be varied as desired to determine the impact on OGIP. For
example, to estimate the impact of a 4% total increase in porosity could have on OGIP, move
right from the median line in the porosity row to 9%, which results in OGIP per section of 80bcf,
holding all other variables at the average (37.5m pay, 6,600 psi). A 4% porosity (better rock)
increase would therefore result in a 77% total increase in OGIP per section. As the tornado chart
shows, pay thickness and porosity are the dominant drivers of variability in OGIP.
15 August 2011
8
Macquarie Research
Fig 9
Duvernay – OGIP Tornado Chart
OGIP (Bcfe/Section)
20
25
30
35
40
45
50
55
60
65
70
75
80
85
Mid Case: 45bcf
Net Pay
25m
60m
30
72
37.5m
3%
Porosity
9%
27
80
5%
0.43 psi/ft
(4,725 psi)
Pressure
0.8 psi/ft
(9,650 psi)
32
65
0.6 psi/ft
(6,600 psi)
Mid Case: 45
15 August 2011
9
Macquarie Research
Duvernay land sales
Over C$1.4bn spent since late 2009
Since late 2009, land sale activity for the Duvernay shales has gone into overdrive, with over
C$1.4bn spent to purchase more than 1.0m net acres of land throughout Alberta (mainly by major
oil & gas companies). Unit prices since 2009 have averaged C$200–400/acre, with some land in
the greater Pembina/Kaybob regions fetching nearly C$5,800/acre. Five of the most notable land
sales include:
1.
Wild River – 15 December 2009. A total of 263,040 acres of land sold for C$332.9m,
amounting to an average price of C$1,266/acre. Some parcels sold for as high as
~C$2,154/acre. Note that this was the first land sale that arguably put the ‘Duvernay shales’
into the spotlight.
2.
Kaybob/Fox Creek – 7 July 2010. A total of 125,440 acres of land sold for C$336.7m, which
translated into an average price of C$2,685/acre. The maximum price paid was
C$4,174/acre. We believe both Encana and Chevron participated in this sale.
3.
South Pembina/Willesden Green – 15 December 2010. A total of ~141,000 acres of land
sold for C$145m or C$1,015/acre solidifying what we view as the continuation of the
Duvernay into the most southeast extremities of the play.
4.
Willesden Green/Pembina/Ferrier – 1 June 2011. In the largest sale to-date in Alberta,
a total of ~360,000 acres in the Willesden Green/Pembina/Ferrier areas went for a mighty
bonus figure of C$753m, translating into an average price paid of C$2,065/acre. Notably,
a land broker paid nearly C$5,800/acre for a parcel of land in the Willesden Green region.
5.
Edson – 27 July 2011. This land sale saw 79,230 net acres going for C$57m for Duvernay
land at Edson, amounting to an average price of ~C$719/acre. The high metric of
C$2,700/acre was similar to the prices paid in the Wild River/Kaybob/Pembina regions during
previous sales.
More Duvernay land up for sale? We believe there remain two additional land sales postings,
one on 24 August 2011 and the other on 21 September 2011, that are of particular interest.
On 24 August, we estimate a total of 11–12 townships of land are up for sale in the Fox
Creek/Sturgeon Lake areas in what we believe is the oil window of the Duvernay shales
(see Fig 10). On 21 September, approximately 6–7 townships are up for grabs in the Ferrier
region, which are nicely situated in the liquids rich gas window of the play (see Fig 12).
15 August 2011
10
Macquarie Research
Fig 10
Deep rights land sale by date – Greater Kaybob
Land Sale Dates - Kaybob
15 August 2011
11
Macquarie Research
Fig 11
Deep rights land sale by price – Greater Kaybob
Land Sale Prices - Kaybob
15 August 2011
12
Macquarie Research
Fig 12
Deep rights land sale by date – Greater Pembina
Land Sale Dates - Pembina
15 August 2011
13
Macquarie Research
Fig 13
Deep rights land sale by price – Greater Pembina
Land Sale Prices - Pembina
15 August 2011
14
Macquarie Research
Meet the players
Because of the expansive nature of the Duvernay shales, we believe there will be plenty of open
Crown land opportunities (as noted previously) for newer entrants to establish an initial position.
That said, the first movers have likely acquired what we deemed as the ‘sweet spots’ of the play.
Because of the high capital intensity (ie, >C$10m DC&T costs), we also believe there will be a
number of producers that may look to sell or farm-out their land positions, similar to what Orleans
and Argosy did with their deep rights at Kaybob and Ante Creek, respectively.
Based on publicly available data, we charted those producers with meaningful Duvernay
positions, as shown in Fig 14. The data provided herein are based on geoSCOUT data, publicly
announced positions, or those disclosed by management. As can be seen, Athabasca (ATH CN)
has the largest Duvernay position within in our study group, followed by Encana (ECA US),
Talisman (TLM CN), Chevron (CVX US), Trilogy (TET CN) and Daylight (DAY CN). Other mid-cap
producers with meaningful positions include Celtic (CLT CN), Angle (NGL CN), Bellatrix (BXE CN),
Vero (VRO CN), Galleon (GO CN), and Chinook (CKE CN). Among the Junior E&Ps within our
coverage universe, Delphi (DEE CN) has a respectable position. In the Private E&P space, we note
that TAQA, B&G, Northern Patriot, PetroSpirit and Arriva all hold Duvernay acreage.
Fig 14
Estimated Duvernay land positions
800
742
700
570 563
500
400
313
300
190
170
156
145 137
135
124 123
110
93
100
79 75 73
68 62 60
59
50 50 50 46 45 42
35 31 28
23 20 18
11
6
5
Arriva*
207 203
200
Argosy
Net Duvernay Sections
600
Yoho
Cequence
Crew
Kilgore
Connacher
Husky
Sirius*
Transerv
Bellatrix
WestFire
Vero
Terra
Birchcliff
Enerplus
Nrth Patriot*
Mako
B&G*
Chinook
Delphi
Bonavista
Angle
Sonde
TAQA*
Longview
Conoco
Celtic
Galleon
NAL
Penn West
PetroBakken
Trilogy
Daylight
Chevron
Encana
Talisman
Athabasca
0
* Private
Source: geoSCOUT, Company reports, Macquarie Research, August 2011
15 August 2011
15
15 August 2011
Jayar
Karr
GREATER
KAYBOB REGION
Wapiti
Wild River
Ferrier
Carrot Creek
Mcleod
Windfall
Westpem
Edson
Kaybob
Snipe Lake
Sturgeon Lake
Simonette
Teepee
Gold Creek
Wembley
Valhalla
Duvernay land map – Greater Kaybob
Fig 15
Macquarie Research
16
15 August 2011
Pembina
Carrot Creek
Marker
Cygnet
Garrington
Harmattan
Chedderville
Wilson Creek
Ferrier
Joffre
Ferrybank
Leduc
Twining
Huxley
Nevis
GREATER PEMBINA
REGION
East Pembina
Duvernay land map – Greater Pembina
2009 to Current
Duvernay
South Pembina
Crown Land
Sales
Willesden Green
Fig 16
Macquarie Research
17
Macquarie Research
Duvernay activity
Activity in the Duvernay shales has largely been a science experiment to this point, with only a
handful of wells recently drilled into the play. In total, we count around 24 wells that have been
licensed or drilled to-date, consisting of 15 vertical delineation/test wells and 9 horizontals. The
two most notable are Celtic, Trilogy and Yoho’s horizontals (33.3% W.I. each) at Kaybob. The
first horizontal tested at 2.1mmcf/d of sweet natural gas and ~75bbl/mmcf of NGLs and
condensate, with only 6 of the 13 planned stages frac’d because of a rupture in the liner, while
the second horizontal tested at 5.2mmcf/d plus 390bbl/d of liquids. Of the 24 wells drilled or
licensed, there are 2 verticals (Yoho and Arriva) and 2 horizontals (ConocoPhillips) licensed in
the greater Pembina region.
For the remainder this year and throughout 2012, another 20+ vertical/horizontal wells are expected
to be drilled. Notable players that have indicated Duvernay programs include Encana at 2 wells,
Talisman at 2–4 wells, Chevron at 5–10 wells, Daylight at 4 wells, and Husky at 2 wells. In addition,
Celtic/Trilogy/Yoho, Birchcliff, PetroBakken, Sonde, Bellatrix, Bonavista and Longview each plan to
drill at least one pilot well in 4Q11 or 1Q12 to help appraise the prospectively of the play.
Based on the activity maps in Figs 17 and 18, we highlight the following six legacy wells that have
tested oil/gas from the Duvernay:
Legacy wells. As background, there have been numerous wells penetrated through the
Duvernay, mostly targeting the Leduc Reefs or Beaverhill Lake trends across the
Kaybob/Pembina region, giving producers plenty of log and core data through the area. Of the
50,000+ wells that have penetrated the Duvernay, we highlight the following six legacy wells:
07-30-58-22W5 (Duvernay Oil) – tested 441mcf/d of gas from the Duvernay, with a
calculated pressure gradient of 0.96psi/ft (+120% overpressured).
14-23-67-24W5 (Murphy Oil) – recovered 562bbl of 39.4°API oil, with a calculated
pressure gradient of 0.53psi/ft (22% overpressured).
05-02-67-26W5 (Forest Oil) – recovered 3,693bbl of oil, with a calculated pressure
gradient of 0.44psi/ft (normally pressured).
06-07-38-27W4 (Kanata) – recovered 1,146m and 304.8m of oil from two DSTs. Gas and
oil to surface from DST #1 were measured at 236mcf/d and 32bbl/d, respectively. The
calculated pressure gradient was 0.48psi/ft (10% overpressured).
16-35-40-03W5 (Texaco) – recovered 634bbl of Duvernay oil.
06-10-38-09W5 (Canadian Hunter) – tested 35mcf/d of Duvernay gas.
Recent wells. Based on public data (as of 30 June), Celtic et al.’s first horizontal located at
15-33-60-20W5 has cumulatively recovered ~128mmcf of gas and 761bbl of condensate. The
second horizontal, which was operated by Trilogy, is located at 03-13-60-20W5 and has recovered
~134mmcf of gas and 9,785bbl of condensate. More recently, Trilogy and Celtic noted associated
liquids production in the 90-100bbl/mmcf (~63% condensate) range in both horizontals. Of the
vertical wells drilled so far, Encana noted its first well into the play (11-08-62-24W5) yielded liquids
in the +75bbl/mmcf range. Lastly, there is one well drilled by Xerex Energy at 07-22-69-21W5 in
the Sturgeon Lake area that cored/logged the ‘oily window’ of the Duvernay formation. We believe
the technical information from this well could be of interest for players in the Sturgeon Lake area
(ie, Delphi, Longview and Athabasca).
What to look for – upcoming wells. Chevron’s 08-15-62-18W5 horizontal licence will be a
key well to watch, as it is located in the ‘oilier’ portion of the play. This could be a catalyst for
producers with lands outside the liquids rich window (ie, Trilogy, Athabasca, Argosy, Longview,
Delphi, etc.). Additionally, we anxiously await upcoming well results in the greater Pembina
region. Specifically, ConocoPhillips has two upcoming horizontals licensed there.
15 August 2011
18
Macquarie Research
Fig 17
Duvernay activity map – Greater Kaybob
GREATER
KAYBOB REGION
Valhalla
Teepee
Wembley
Gold Creek
05-02-67-26W5
Vertical
Forest Oil
Pgrad: 0.44psi/ft
Cum: 3.7mbbl
D24
14-23-67-24W5
Vertical
Murphy Oil
Pgrad: 0.53psi/ft
Cum: 0.562mbbl
API: 39.4°
Snipe Lake
Xerex - Vert
07-22-69-21W5
Sturgeon Lake
Trilogy - Dev
09-18-64-19W5
Wapiti
Karr
Encana - Vert
11-08-62-24W5
Yoho - Dev
14-16-62-21W5
Athabasca - Vert
10-09-62-23W5
D22
Jayar
TAQA - Hztl
16-36-61-19W5
Celtic - Vert
14-15-61-21W5
D21
Husky - Vert
08-25-60-18W5
Celtic - Hztl
15-33-60-20W5
CCRL - Hztl
01-18-60-20W5
07-30-58-22W5:
Vertical
Duvernay Oil
Pgrad: 0.96psi/ft
Test: 441mcf/d
Chevron - Hztl
06-22-62-18W5
Celtic - Dev
13-20-60-17W5
Wild River
Celtic - Vert
13-25-59-19W5
Talisman - Vert
12-12-57-22W5
Husky - Vert
10-33-56-22W5
D12
Mcleod
Trilogy - Hztl
03-13-60-20W5
CCRL - Hztl
01-08-57-18W5
Chevron - Hztl
Edson
D11 04-21-59-19W5
Carrot Creek
Angle - Vert
04-36-52-17W5
D10
Westpem
Ferrier
15 August 2011
19
Macquarie Research
Fig 18
Duvernay activity map – Pembina region
D12
GREATER PEMBINA
REGION
Carrot Creek
D11
D10
Pembina
East Pembina
South Pembina
Leduc
D6
Willesden Green
Conoco - Hztl
07-11-45-07W5
Ferrybank
16-35-40-03W5
Vertical
Texaco
Cum: 0.63mbbl
Conoco - Hztl
11-16-44-07W5
D4
Ferrier
Yoho - Vert
16-24-38-07W5
Joffre
06-10-38-09W5
Vertical
Canadian Hunter
Test: Gas @ 35mcf/d
Arriva - Vert
01-06-38-07W5
Nevis
Cygnet
D1
Huxley
Marker
Harmattan
06-07-38-27W4
Kanata
DST#1/2: 2,435m-2,456m,
2,441-2,457m
Rec: 1,146m oil, 305m oil
GTS #1: 236mcf/d
OTS #1: 32bbl/d
Pgrad: 0.48psi/ft
Twining
Garrington
15 August 2011
20
Macquarie Research
Case study: Eagle Ford shales
Though production data is limited in the Duvernay, industry players generally believe this play will
have highly variable liquids content, depending where the acreage is situated. A recent case study
of a shale gas play with this characteristic is the Eagle Ford of south Texas. This play is about two
years ahead of the Duvernay in terms of its development, and with several well penetrations,
industry has been able to map the dry gas and liquids rich portions of the play (Fig 19).
The Eagle Ford trends southwest to northeast. Lands on the southern portion of the trend are
generally dry with no associated condensate or NGLs. The northern regions become much more
oily, with gas a much smaller fraction of the overall production mix. The downside is the high
relative viscosity of the oil can reduce recoverable reserves. The sweet spot of the play seems to
be the condensate/gas window that runs in the middle, where the lower viscosity liquids
combined with high gas content see very high recoveries.
Fig 19
Eagle Ford liquids content
Source: US EIA, Macquarie Research, August 2011
This variation in liquids content is clearly evident in Fig 20. The oil to gas ratio (OGR) ranges from
0bbl/mmcf (dry gas) in the southeast to nearly 300bbl/mmcf in the northwest. Initial results from
the Duvernay have delivered OGR’s of ~70-100bbl/mmcf, which would put it just below the
average of the Eagle Ford. However, we see potential for much higher liquids yields as more
wells are drilled to define the liquids rich sweet spot of the play.
15 August 2011
21
Macquarie Research
Fig 20
Eagle Ford liquids content cross section
Source: Pioneer Resources, Macquarie Research, August 2011
Rock characteristics and depth similar
The overall depositional setting and reservoir characteristics are quite comparable between the
Eagle Ford and the Duvernay (Fig 21). The depth to the Duvernay and Eagle Ford is nearly
identical, and we expect lateral horizontal length to also end up similarly. Gross reservoir pay is
also consistent, though the Duvernay is lower in comparison. Eagle Ford drill/case/completion
costs are running between US$8–10m per well. Given the early stage of the Duvernay, there is
limited data, with only Trilogy’s well at Kaybob having reported costs as high as C$17m. We do
not view this as representative as there were drilling issues with this horizontal. We expect costs
for the Duvernay to approach those in the Eagle Ford given their similar depths (both True
Vertical Depth and Measured Depth).
Fig 21
Duvernay and Eagle Ford comparison
Depth (TVD, ft)
Depth (TVD, m)
Max Gross Pay (ft)
Max Gross Pay (m)
Hztl Lateral Length (ft)
Hztl Lateral Length (m)
Well Cost ($m, drill/case/complete)
GIP/section (bcfe)
GIP/section (mmboe)
EUR/well (bcfe)
EUR/well (mboe)
Pressure Gradient (psi/ft)
Permeability (mD)
Total Porosity (%)
Gas Filled Porosity (%)
Total Organic Content (%)
Carbonate / Silica content (%)
Liquids Yield (bbl/mmcf)
Duvernay (Kaybob)
10,500 - 12,000
3,200 - 3,800
100 - 200
30-60
5,300-6,000
1,600-1,800
$17 (dropping)
Eagle Ford
11,000 - 12,000
3,350 - 3,650
100 - 300
30-90
3,000-6,000
900 - 1,800
$8 - $10
100-150
16-25
5-6
867-940
0.83
0.00001 - 0.01
3-12
6-10
2-6
50 - 60
70-100
180 - 210
30-35
3-6
500-1000
0.65
0.0011
6-14
9
2-6
70
0 - 1,000
Source: Company Reports, Macquarie Research, August 2011
15 August 2011
22
Macquarie Research
Going deep. At depths of over 3,000m, both plays are at the deeper end of the range for wells
drilled onshore in North America. Hence, given the relatively high costs associated with the play,
we ultimately expect the Duvernay to be dominated by larger players with deep pockets.
Under pressure. Both the Duvernay and Eagle Ford are overpressured; that is, the reservoir
pressure is higher than projected based on depth. This is important for two reasons: 1) the
storage capacity of the rock is higher at higher pressures (for gas); and 2) the deliverability is
higher as there is more potential energy under gas drive where the force of the gas expanding is
what results in higher production rates.
‘Frac-ability’ expected to be similar. The silica and carbonate contents of both reservoirs are
similar. The higher the silica content, the more brittle the rock, which is one indicator of the ability
for induced fractures to propagate in the reservoir. Comparatively, rock with a higher clay content
is more ductile and resilient to fracturing. We see that the Duvernay certainly meets the criteria for
multi-stage fracturing, depending on the location.
Comparable resource density. The volume of resource in place is highly variable in the Eagle
Ford, and there is nearly a linear relationship with thickness. More rock results in more resource.
The same is true for the Duvernay. We estimate the thicker portions of the Duvernay should hold
similar resource in place as the Eagle Ford. The challenge will be to figure out the optimal
completion method to maximize recovery factors. As more wells are drilled, we will also get more
insight into how much of the resource in place is liquids or oil versus dry natural gas.
Completion methods: Optimizing costs and recoverable reserves
Duvernay completions. With only two horizontals down into the Duvernay, there has not been a
convergence towards a preferred completion method for the play. Production rates and EUR’s
are highly contingent on the type of frac fluid, size of fracs, proppants and number of fracs per
horizontal section.
Celtic/Trilogy/Yoho. The group’s first well was completed using a ‘Packers Plus’ assembly.
Despite only six stages of the planned thirteen being completed due to rupture in the liner,
Celtic et al. pumped ~100 tonnes of sand into each stage combined with 1,500m3 of slick
water. The group’s second Duvernay horizontal was completed using a staged ‘plug and perf’
horizontal completion technique, which incorporated perforation clusters (2–3 per stage) to
stimulate the well. In total, Trilogy et al. pumped a total of 2,300 tonnes of sand along with
138,600bbl of slick water into 12 stages. Based on the results of these two horizontals, we
understand the group may try a ‘hybrid’ fluid of slick water and cross linked gels, which may
improve productivity.
Eagle Ford completions. On our thesis that the Eagle Ford represents the most direct
comparison to the Duvernay, we summarize what some of the key players have discovered
regarding completions and well performance on that play.
Pioneer Resources (PXD US). One of the most active Eagle Ford shale players, Pioneer has
moved from using slick water fracs, to what it calls a ‘hybrid’ fluid of slick water and cross-linked
gels. Most wells have 14–18 stages, with 300,000lbs of sand placed in each stage. The first
50,000lbs of sand is typically 100 mesh sand, with the remainder a light weight ceramic. Total
proppant placed can be well above 4m lbs per well. It is believed that the cross linked gels are
better able to carry more sand deeper into the formation. As the Eagle Ford is deeper than most
shale plays, the reservoir temperature is higher, facilitating the breakdown of the gels in the
reservoir, with no noticeable impact on production. Production results clearly exhibit similar initial
production rates, though at a much lower decline rate than with slick water alone.
15 August 2011
23
Macquarie Research
Fig 22
Pioneer Eagle Ford completion comparison
Source: Pioneer Resources, Macquarie Research, August 2011
Petrohawk (HK US). Petrohawk was recently acquired by BHP, and arguably the crown jewel
within Petrohawk’s portfolio is its Eagle Ford position. Similar to Pioneer, Petrohawk was
evaluating a combination of slick water and gel. In addition, the company was evaluating a
number of other variables to determine the impact on productivity. Some factors include length
of the horizontal lateral, number of perforations per stage, ceramic versus sand and the
optimum concentration of sand per stage.
Aurora Oil and Gas (AEF CN). Aurora’s operating partner, Hilcorp (recently acquired by
Marathon), has moved to utilizing Schlumberger’s HiWAY frac process. This process aims to
increase fracture conductivity, facilitating the movement of hydrocarbons in the fracture to a
greater degree than conventional frac jobs. The proppant is placed in pulses, interspersed with
carrying fluid (slick water), while perforations are placed to enhance the formation of channels.
The intent is to ensure that the proppant is placed in all perfs, not just one set.
Fig 23
Schlumberger HiWAY Frac
Source: Schlumberger, Macquarie Research, August 2011
15 August 2011
24
Macquarie Research
Duvernay economics
Liquids abound
In the current gas price environment, producers are seeking exposure to liquids-rich projects that
can enhance the revenue stream. An important element supporting Duvernay economics is the
associated liquids yield. The first two horizontals into the plays have tested over 75bbl/mmcf of
NGLs (the second horizontal tested 390bbl/d of NGLs, including 180bbl/d of 56° API condensate).
More recently, Trilogy, Celtic, and Yoho have noted liquids yield closer to 90–100bbl/mmcf of
NGLs from their first two horizontals. While initial results are encouraging, further production data
is required to ascertain whether the well can continue generating liquids at this level.
Type curves. We introduce four horizontal type well curves and economics in the following
figures. Given the lack of publicly available production data, we have placed increasing
importance on input sensitivities, namely, in the liquids yield, EURs and capital costs. Our type
well assumptions will evolve with further delineation of the play by industry participants.
We assume a consistent IP rate of 4.2mmcf/d of natural gas in our four type well curves that vary
by liquids content: 50bbl/mmcf, 75bbl/mmcf, 100bbl/mmcf and 150bbl/mmcf. Our EUR
assumptions range from 725mboe/well to 1,055mboe/well. The majority of the recent well
licences have been within the liquids-rich gas portion of the fairway as wells targeting the dry gas
window to the west would otherwise be uneconomic in the current gas price environment. We do
not have any data on the potential recoveries in the oil window.
Fig 24
Macquarie Duvernay type well assumptions
Inputs
Total Costs ($m)
IP Rate (mmcf/d)
IP Rate (boe/d)
EUR/well (bcfe)
EUR/well (mboe)
% liquids
Gas Heat Value (BTU/scf)
Fixed Opcosts ($/well/month)
Variable Opcosts ($/mcf)
Duvernay
Duvernay
150bbl/mmcf 100bbl/mmcf
$11.0
$11.0
4.2
4.2
1,330
1,120
6.3
5.3
1,055
890
47%
38%
150
100
1,050
1,075
$2,000
$2,000
$1.20
$1.20
Duvernay
75bbl/mmcf
$11.0
4.2
1,015
4.8
805
31%
75
1,100
$2,000
$1.20
Duvernay
50bbl/mmcf
$11.0
4.2
910
4.4
725
23%
50
1,125
$2,000
$1.20
Economic Metrics
F&D Costs ($/boe)
NPV10 BT ($m)
NPV10 AT ($m)
NPV10 BT ($/boe)
NPV10 AT ($/boe)
P/I Ratio (BT)
P/I Ratio (AT)
IRR (BT)
IRR (AT)
150bbl/mmcf 100bbl/mmcf
$10.43
$12.36
$16.4
$11.3
$10.7
$7.1
$15.54
$12.71
$10.10
$7.98
1.49
1.03
0.97
0.65
82%
58%
53%
38%
75bbl/mmcf
$13.66
$8.7
$5.3
$10.79
$6.54
0.79
0.48
46%
30%
50bbl/mmcf
$15.17
$6.0
$3.4
$8.33
$4.70
0.55
0.31
34%
23%
Note: Economics based on our Macquarie long-term price deck of WTI US$90/bbl, Henry Hub US$6.00/mmbtu,
Canadian dollar US$0.95
Source: ValNav, Macquarie Research, August 2011
15 August 2011
25
Macquarie Research
Fig 25
Macquarie Duvernay type well production profiles
1,400
Duvernay - 150bbl/mmcf
Producing day rate (boe/d)
1,200
1,000
800
600
400
200
0
1
4
7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58
Months on production
Source: ValNav, Macquarie Research, August 2011
Relative permeability. It is important to highlight that our four Duvernay cases assume
increasing EURs with liquids yield. This assumption is likely flawed, in our view, given a higher
oil-to-gas ratio generally translates into a lower gas drive (ie, less energy in the reservoir to push
the liquids out), more viscous liquids, and lower relative permeability, which would result in lower
ultimate recoveries or EURs, all else being equal. That said, we have left our EUR assumptions
unchanged, as noted previously, pending more production data.
Type well economics. Our 75bbl/mmcf type well (base case) generates a before tax NPV of
C$8.7m and profit-investment ratio of 0.8x with IRR of 46%. Assuming a drill, complete and tie-in
cost of C$11m, the well is expected to recover 805mboe/well. The before tax break-even supply
cost for this well is estimated at US$3.79/mmbtu. Our economics are based on our long-term price
deck assumptions of US$90/bbl WTI, US$6.00/mmbtu Henry Hub and US$0.95 Canadian dollar.
Pricing. The realized NGL plus condensate pricing varies with the components in the liquids
stream (eg, condensate, pentane, butane, ethane, etc.), and will depend on the producer’s
ability to extract these higher valued liquids through deep cut facilities. We have assumed a
20% differential to the WTI oil price for the NGL stream (ie, 60% condensate/40% NGL mix).
Royalties. The Alberta royalty framework offers attractive incentives to promote unconventional
shale gas drilling activity. Horizontal shale gas wells are subject to a 5% royalty rate for a
maximum of 36 months, with no volume cap. Also, gas wells drilled to true vertical depths
(TVD) greater than 2,000m qualify for the Natural Gas Deep Drilling Program (NGDDP).
At TVD of 3,200–3,800m in the Kaybob region, Duvernay shale wells meet the criteria and
allow producers to claim this royalty benefit. Royalty rates for NGLs range between 35–40%
depending on the liquids composition.
15 August 2011
26
Macquarie Research

Well costs. Our cost assumptions are on a half-cycle basis, including drilling, completion and
tie-in well costs and excluding upfront expenditures for land and facilities. At Kaybob, we
forecast drill, complete and tie-in costs of C$11m, consisting of horizontal drilling costs of
C$4.2m and completion costs of C$6.0m. Note that the completion costs will be highly
dependent on the technology used, number of frac stages, size of fracs (tonnes) and types of
frac fluid and proppant (sand was used in the first two horizontal wells). Once producers have
transitioned the play into development, multiple-leg and pad drilling could improve total costs.
As background, the price tag for the first Duvernay horizontal well came-in at C$4m to drill
and case over a period of 42 days, with only 6 of 13 stages frac’d. Excluding the rupture in
the liner, Celtic believed a drill and complete cost of C$7–8m would have been reasonable.
The second horizontal was drilled over 50 days for C$6.5m and was completed using the
‘perf-and-plug’ method with slick water fracs at a cost of C$11m, totalling C$17.5m.
Acknowledging that this latest well is not economic at such a high cost and current gas
prices, we are not quick to dismiss the Duvernay play based on the initial results of these first
wells. These are designated ‘science wells’ and we believe capital efficiencies should
improve with time when the optimal drilling and fracturing design is achieved.

In comparison. Celtic, Trilogy and Yoho’s well assumptions range between 4.1–4.7mmcf/d
for IP30 rates, 5.0–5.6bcfe/well EUR, 70–75bbl/mmcf of NGLs and C$10–12m/well for an
all-in capital costs (drill, complete and tie-in).
Development scenario. Note that the resource in place in the Kaybob region, specifically for the
liquids rich gas window, is estimated between 100–150bcf per section. Using our 4.8bcfe/well
EUR (base case) and a well density of 5–8 wells per section, this would result in a recovery factor
of ~20–25%. For the oil and gas windows of the Duvernay, we believe the ultimate well density or
recovery factor will be highly dependent on some of the key geological factors noted earlier in the
report (ie, thickness, porosity, pressure, water saturation, etc.).
Economic sensitivities. The Duvernay is still a play in its infancy and will show variability in
initial rates, recoveries and costs. In Figs 26–29, we show NPV sensitivities to commodity prices,
liquids yield and capital costs. Unless noted, our economic sensitivities assume a constant oil:gas
price ratio of 15:1 (eg, US$90/bbl WTI and US$6.00/mmbtu Henry Hub). Overall, we believe a
50bbl/mmcf liquids yield is the minimum amount necessary to achieve a 20% AT IRR.
Fig 26
Before tax P/I sensitivity to commodity prices
Fig 27
$27.0
3.5x
3.0x
2.5x
Duvernay 75bbl/mmcf -10% cost
Duvernay 75bbl/mmcf $11m cost
Duvernay 75bbl/mmcf +10% cost
$24.0
$21.0
BT NPV10 (C$m)
2.0x
BT P/I Ratio (x)
Before tax NPV sensitivity to liquids yield
1.5x
1.0x
$18.0
$15.0
$12.0
$9.0
0.5x
$6.0
0.0x
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$3.0
-0.5x
$0.0
-1.0x
50
NYMEX Gas (US$/mmbtu)
75
100
125
150
175
200
Note: A Profit-Investment ratio of zero represents economic break-even, or
10% IRR
15 August 2011
27
Macquarie Research
Fig 28
Before tax NPV sensitivity to capital costs
Fig 29
$30.0
$27.0
180%
160%
$24.0
$18.0
120%
$15.0
100%
BT IRR (%)
BT NPV10 (C$m)
140%
$21.0
$12.0
$9.0
80%
$6.0
60%
$3.0
40%
$0.0
-$3.0
Before tax IRR sensitivity to capital costs
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
20%
$8.00
0%
-$6.0
$2.00
-$9.0
$3.00
$7.00
$8.00
$7.00
$8.00
$7.00
$8.00
120%
100%
$15.0
$12.0
80%
BT IRR (%)
BT NPV10 (C$m)
$6.00
140%
$24.0
$18.0
$5.00
$21.0
$4.00
-20%
$9.0
$6.0
60%
40%
$3.0
$0.0
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
20%
$8.00
-$3.0
0%
-$6.0
$2.00
-$9.0
$3.00
$18.0
$6.00
100%
80%
$12.0
60%
$9.0
$6.0
BT IRR (%)
BT NPV10 (C$m)
$5.00
$15.0
$4.00
-20%
$3.0
$0.0
$2.00
$3.00
$4.00
$5.00
$6.00
-$3.0
$7.00
40%
20%
$8.00
0%
$2.00
$3.00
$4.00
$5.00
$6.00
-$6.0
-20%
-$9.0
-$12.0
-40%
15 August 2011
28
Macquarie Research
Break-even supply cost. We summarize the break-even supply costs for each of our Duvernay
type curves in Fig 30. These costs show the before and after tax natural gas prices (Henry Hub)
required for a successful well and are reported on a half-cycle basis. The before tax break-even
supply costs for our horizontal Duvernay type curves range between US$2.80–4.30/mmbtu.
Fig 30
Duvernay break-even supply costs
$5.00
$4.63
Before tax
After tax
$4.50
$4.30
$4.08
$4.00
$3.79
Supply cost (US$/mmbtu)
$3.64
$3.38
$3.50
$3.02
$3.00
$2.80
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
150bbl/mmcf
100bbl/mmcf
75bbl/mmcf
50bbl/mmcf
How does it stack up? Our 75bbl/mmcf case ranks in the middle-to-lower end of the P/I
spectrum relative to its tight gas play peers. We expect activity to accelerate in the following
12 months, which may result in producers identifying the sweet spots of the play and the best
(and most economic) way to drill and complete these wells. As shown in Fig 31, increasing liquids
yield improves the break-even supply costs.
Fig 31
Comparative break-even supply costs (US$/mmbtu) and profit-investment (P/I) ratios
Breakeven (BT)
Median (BT)
$6.00
3.0
Breakeven (AT)
Median (AT)
P/I Ratio (BT)
P/I Ratio (AT)
Median (BT)
Median (AT)
2.5
$5.00
$4.00
2.0
Median: $3.86
Median: $3.63
1.5
$3.00
$2.00
1.0
$1.00
0.5
$0.00
0.0
Median: 0.9
Haynesville-6bcf
Duvernay
50bbl/mmcf
Fayetteville-Tier1
Haynesville-8bcf
Duvernay
75bbl/mmcf
Horn River-Core
Duvernay
100bbl/mmcf
Eagle Ford
100bbl/mmcf
Marcellus-Tier1
BC Montney
Duvernay
150bbl/mmcf
Fayetteville-Core
BC Montney20bbl/mmcf
Marcellus-Core
Eagle Ford
200bbl/mmcf
Barnett-Core
Haynesville-6bcf
Duvernay
50bbl/mmcf
Horn River-Core
Fayetteville-Tier1
Duvernay
75bbl/mmcf
Haynesville-8bcf
Eagle Ford
100bbl/mmcf
Duvernay
100bbl/mmcf
BC Montney
Marcellus-Tier1
Fayetteville-Core
Duvernay
150bbl/mmcf
BC Montney20bbl/mmcf
Marcellus-Core
Eagle Ford
200bbl/mmcf
Median: 0.5
15 August 2011
29
Macquarie Research
Infrastructure
Though it may be premature to discuss infrastructure needs for an early stage resource like the
Duvernay, we feel it is important to highlight some of the major processing facilities in the both the
Kaybob and Pembina regions. Given the Duvernay stretches across most of the Alberta Deep
Basin, gas gathering lines, compressor stations, and gas facilities are already well
established/developed. In addition, the gas content from some of the early Duvernay wells is
essentially sweet, so no sour gas processing is required. In both the Greater Kaybob and
Pembina regions, we have provided a map of the major gathering lines/facilities in Figs 32 and
33. Note that we have shown only gas plants with processing capacities greater than 100mmcf/d.
Deep vs. shallow cut. With the Duvernay being potentially a sizable liquids rich gas play, we
believe producers will be looking to process their raw gas streams through ‘deep cut’ facilities,
rather than the standard ‘shallow cut’ or general field plants. ‘Deep cut’ refers to plants that are
capable of separating nearly 100% of the propane, butane, pentanes/condensate and +60% of
the ethane from a typical gas stream. Segregation of these constituents provides producers with
higher revenue/netbacks, all else being equal, and accordingly, better per well economics.
‘Shallow cut’ plants typically only recover 100% of the butane and pentane/condensate, but less
than 60% of the propane and none of the ethane. Our view is that producers will ultimately move
their raw gas stream to ‘deep-cut’ style facilities, either through their own or third-party
expansions, in order to realize the best economic return from their Duvernay wells.
15 August 2011
30
Macquarie Research
Fig 32
Greater Kaybob regional facilities & major gathering lines
Valhalla
Teepee
Wembley
Devon Elmworth
Capacity: 426mmcf/d
Raw Gas: 372mmcf/d
Snipe Lake
Sturgeon Lake
Keyera Simonette
Capacity: 150mmcf/d
Raw Gas: 64mmcf/d
Devon Wapiti
Capacity: 300mmcf/d
Raw Gas: 280mmcf/d
Trilogy Kaybob
Capacity: 213mmcf/d
Raw Gas: 98mmcf/d
Kaybob
Karr
SemCAMS KA
Capacity: 397mmcf/d
Raw Gas: 207mmcf/d
Jayar
Simonette
Pembina Musreau
Capacity: 206mmcf/d
Raw Gas: 191mmcf/d
SemCAMS Whitecourt
Capacity: 424mmcf/d
Raw Gas: 50mmcf/d
Wild River
TransCanada Big Eddy
Capacity: 730mmcf/d
SemCAMS K3
Capacity: 674mmcf/d
Raw Gas: 275mmcf/d
Mcleod
Edson
Carrot Creek
Talisman Edson
Capacity: 375mmcf/d
Raw Gas: 184mmcf/d
Suncor Hanlan
Capacity: 426mmcf/d
Raw Gas: 181mmcf/d
Keyera Brazeau
Capacity: 219mmcf/d
Raw Gas: 90mmcf/d
Westpem
Ferrier
15 August 2011
31
Macquarie Research
Fig 33
Greater Pembina regional facilities & major gathering lines
Carrot Creek
Pembina
East Pembina
Leduc
Imperial Bonnie Glen
Capacity: 260mmcf/d
Raw Gas: 27mmcf/d
South Pembina
Willesden Green
Ferrier
Keyera Brazeau
Capacity: 219mmcf/d
Raw Gas: 90mmcf/d
Ferrybank
AltaGas Joffre
Capacity: 251mmcf/d
Raw Gas: 10mmcf/d
Wilson Creek
Joffre
Chedderville
Keyera Strachan
Capacity: 275mmcf/d
Raw Gas: 204mmcf/d
Husky Strachan
Capacity: 532mmcf/d
Raw Gas: 291mmcf/d
Cygnet
Apache Ricinus
Capacity: 221mmcf/d
Raw Gas: 59mmcf/d
Shell Caroline
Capacity: 385mmcf/d
Raw Gas: 132mmcf/d
Nevis
Huxley
Taylor Harmattan
Capacity: 493mmcf/d
Raw Gas: 136mmcf/d
Harmattan
Twining
Garrington
Bonavista Carstairs
Capacity: 350mmcf/d
Raw Gas: 19mmcf/d
15 August 2011
32
Macquarie Research
Valuation and conclusion
Do the ‘Dew’vernay! The use of horizontal multi-frac technology along with a greater technical
understanding of shales has no doubt opened up a number of additional resource plays across North
America. The Duvernay shales are a perfect example of a newer resource play that with a significant
amount of science, a lower cost structure, and a little luck, could emerge as one of the biggest
resources to hit Western Canada since the Montney. With 24 wells drilled or licensed so far, with
another +20 planned for 2011/2012, we expect upcoming well results to be important data points for
producers with Duvernay exposure. Further down the road, if the ‘hype’ lives up, we anticipate
heightened acquisition activity, especially for those looking to consolidate their positions.
Acre/EV. Because it is still early days for the Duvernay, we have limited the use of risked upside
for generating a comparative valuation. Instead, to measure Duvernay leverage, we have created
an Acre/EV comparison, as shown in Fig 34. We note that measuring leverage based on an
Acre/EV metric has limitations, as not all producers are Duvernay pure-plays and the metric is
often skewed by production and other assets both domestically and internationally.
Fig 34
Acre/EV comparison
3000
Acre/EV (acre/$m)
2000
1500
500
450
400
350
300
250
200
150
100
50
0
Mako
Kilgore
Sonde
Transerv
Galleon
Terra
Delphi
Longview
Athabasca
Angle
Vero
Yoho
Chinook
Argosy
Bellatrix
NAL
Daylight
WestFire
Trilogy
Celtic
PetroBakken
Talisman
Connacher
Birchcliff
Encana
Cequence
Bonavista
Penn West
Crew
Enerplus
Chevron
Conoco
Husky
Acre/EV (acre/$m)
2500
1000
500
Husky
Conoco
Chevron
Crew
Enerplus
Bonavista
Penn West
Encana
Cequence
Birchcliff
Talisman
Connacher
Celtic
PetroBakken
Trilogy
WestFire
NAL
Daylight
Bellatrix
Argosy
Chinook
Vero
Yoho
Angle
Longview
Athabasca
Terra
Delphi
Galleon
Sonde
Transerv
Mako
Kilgore
0
To partially compensate for the limitations of Acre/EV metric, we have provided in Fig 35 the
percentage of Duvernay land versus its total undeveloped land position compared to a company’s
enterprise value. In other words, if a producer’s Duvernay position accounts for a large portion of
its total undeveloped acreage, then the company is more leveraged to the play for every dollar of
enterprise value.
15 August 2011
33
Macquarie Research
Fig 35
% of Duvernay lands versus EV
50%
Duvernay lands/Total Undeveloped lands
50%
45%
LNV
Duvernay lands/Total Undeveloped lands
40%
NGL
35%
TET
ATH
30%
VRO
25%
45%
LNV
NGL
40%
35%
TET
VRO
25%
DAY
20%
15%
10%
5%
0%
$-
DAY
20%
SOQ
ATH
30%
SOQ
GO
WFE
BXE CLL
GSY
TT
YO DEE
CKE
CQE
$1,000
BNP
BNP
NAE
CLT
PBN
BIR
ERF
CR
$2,000
$3,000
$4,000
EV (C$m)
$5,000
$6,000
$7,000
NAE
GO
15%
10%
5%
0%
$-
CLT
WFE
BXE
CLL
PBN
GSY
BIR
TT
YO
DEE
CKE
CQE CR
PWT
ECA
ERF
TLM
$5,000
$10,000
$15,000
$20,000
HSE
$25,000
$30,000
EV (C$m)
Putting it all together. Within our coverage universe, Talisman Energy (TLM CN) shows up as
the most leveraged Large Cap producer followed by Encana (ECA US). Among our high yield/mid
cap producers, we believe Athabasca (ATH CN), Daylight (DAY CN), Celtic (CLT CN), Chinook
(CKE CN), Bellatrix (BXE CN), Vero (VRO CN) and Angle Energy (NGL CN) have the best
exposure to the play. On the smaller cap side, Delphi (DEE CN) has the highest leverage relative
to its size, though we note its lands are located in the more unproven ‘oil window’ of the play.
Outside our coverage universe, we highlight Trilogy (TET CN), Mako Energy (MKE AU), Kilgore
(KOG AU), Sonde Resources (SOQ CN), Longview (LNV CN), Galleon (GO CN), Yoho (YO CN)
and Terra (TT CN).
Balancing the high capital intensity of the play, quality of the assets, leverage, and upcoming
catalysts, our top picks are Talisman (TLM CN), Encana (ECA US), Celtic (CLT CN), Daylight
(DAY CN), Angle (NGL CN) and Athabasca (ATH CN).
15 August 2011
34
Macquarie Research
Appendices
Fig 36
Duvernay producers
Large Cap Producers - Publicly Listed
Bonavista
BNP CN
75 net sections
Willesden Green/Ferrier/Pembina
w et gas w indow
Chevron
CVX US
313 net sections
Kaybob/Wild River
w et gas/oil w indow
Conoco
COP US
135 net sections
Greater Pembina
Daylight
DAY CN
203 net sections
Kaybob/Pembina
Encana
ECA US
570 net sections
Kaybob/Pembina/Simonette
Enerplus
ERF CN
59 net sections
unknow n
unknow n
Husky
HSE CN
31 net sections
Kaybob/Wild River
w et/dry gas w indow
NAL
NAE CN
170 net sections
Sturgeon Lake/Ante Creek
oil w indow
Penn West
PWT CN
156 net sections
Pembina/Willesden Green
Talisman
TLM CN
563 net sections
Wild River/Pembina
w et/dry gas w indow
Mid cap - Publicly Listed
Angle Energy
NGL CN
110 net sections
Edson/McLeod/Ferrier
w et gas w indow
Athabasca
ATH CN
742 net sections
Greater Kaybob/Ante Creek
oil/w et gas w indow
w et gas w indow
Bellatrix
BXE CN
46 net sections
Willesden Green
Birchcliff
BIR CN
50 net sections
Economy/Ante/Manir
oil w indow
Celtic Exploration
CLT CN
145 net sections
Kaybob
w et gas w indow
Cequence
CQE CN
11 net sections
Kaybob
w et gas w indow
Chinook
CKE CN
68 net sections
Knopcik
w et gas w indow
Connacher
CLL CN
28 net sections
Karr
w et gas w indow
Crew
CR CN
23 net sections
Edson/Carrot Creek
Galleon
GO CN
137 net sections
Puskw a
oil w indow
Longview
LNV CN
123 net sections
Sturgeon Lake
oil w indow
PetroBakken
PBN CN
190 net sections
Sakw a/Tw o Creek
oil w indow
Trilogy
TET CN
207 net sections
Kaybob/Fox Creek
Vero
VRO CN
50 net sections
Edson/Kaybob
w et gas w indow
WestFire
WFE CN
45 net sections
Sturgeon Lake
oil w indow
Sm all cap - Publicly Listed
Argosy
GSY CN
6 net sections
Ante Creek
Delphi
DEE CN
79 net sections
Sturgeon Lake
oil/w et gas w indow
oil w indow
Kilgore
KOG AU
20 net sections
Willesden Green/Pembina
Mako
MKE AU
62 net sections
Sonde Resources
SOQ CN
93 net sections
Fox Creek/Grand Prairie
oil w indow
Terra
TT CN
50 net sections
Karr
oil w indow
Transerv
TSV AU
42 net sections
Yoho
YO CN
18 net sections
Kaybob
w et gas w indow
Private Com panies
Arriva
Private
5 net sections
Ferrier
w et gas w indow
B&G Energy
Private
73 net sections
Ante Creek/Kaybob
Northern Patriot
Private
60 net sections
Sylvan Lake
oil w indow
PetroSpirit
Private
13 net sections
Willesden Green/Sunchild
w et gas w indow
Sirius
Private
35 net sections
Pembina
oil w indow
TAQA North
Private
124 net sections
Kaybob/Pembina
w et gas w indow
Source: Company reports, geoSCOUT, Macquarie Research, August 2011
15 August 2011
35
Macquarie Research
Fig 37
Duvernay producers – Summary of net sections
Angle (NGL CN; C$8.15); Rating: Outperform; Target: C$11.50
Net Sections: 110
Angle holds 110 net sections of Duvernay rights in Edson (45 net sections) and the greater Kaybob/Ferrier
areas. At Edson, the company sees higher porosities (up to 14%) compared to the Duvernay in Kaybob;
however, the thickness there is lower (~20–25m), which may translate into a lower OGIP. Note that the
company already completed drilling its vertical well at 04-36-5217W5 (Edson).
Argosy (GSY CN; C$2.57); Not Rated
Net Sections: 6
Argosy holds an 82% working interest in 7.5 gross sections of Duvernay prospective land at Ante Creek.
Currently, there are no plans to either drill or test the Duvernay formation; however, the company may look to
farm-out opportunities to larger players with deeper pockets.
Arriva (Private); Not Rated
Net Sections: 5
Arriva’s total land position is unknown; however, based on geoSCOUT, we estimate the company holds
5 net sections in the Greater Pembina fairway. The company has licensed its first vertical Duvernay well at
01-06-038-07W5.
Athabasca (ATH CN; C$13.32); Rating: Outperform; Target: C$20.00
Net Sections: 742
Since purchasing 1.0m acres of land in the Deep Basin in late 2009 through 2010, the company now holds
475,000 net acres prospective for the Duvernay formation. Note that most of these lands were acquired at an
attractive price of ~C$100/acre, which is well below the prices paid in recent land sales. In our view, the
majority of Athabasca’s lands fall within the oil/liquids rich gas window of the Duvernay. In terms of activity,
Athabasca has drilled a vertical well in Saxon (102-10-09-62-23W5).
15 August 2011
36
Macquarie Research
B&G (Private); Not Rated
Net Sections: 73
Bellatrix (BXE CN; C$4.15); Rating: Outperform; Target: C$6.25
Net Sections: 46
Bellatrix holds 46 net sections of Duvernay rights west of the Willesden Green area on First Nation's Land. The
company has indicated it may look to lengthen an existing vertical well and then take the well horizontal. Drilling
plans are tentatively scheduled for 1H12.
Birchcliff (BIR CN; C$13.10); Rating: Neutral; Target: C$12.00
Net Sections: 50
Based on geoSCOUT, we estimate Birchcliff holds over 50 net sections of Duvernay acreage, all located in the
oil/liquids rich gas window of the play. It plans to drill a vertical exploration test into the Duvernay sometime in
late 2011.
Bonavista (BNP CN; C$25.91); Restricted
Net Sections: 75
Bonavista announced that it holds ~75 net sections of Duvernay rights in the condensate window. The majority
of these lands were acquired through the company's 2009 acquisition of the Hoadley property from Encana.
15 August 2011
37
Macquarie Research
Celtic (CLT CN; C$21.18); Rating: Outperform; Target: C$29.00
Net Sections: 145
Celtic Exploration has participated in a total of five Duvernay vertical tests and two horizontals. Its first operated
horizontal (33.3% W.I.) that was partnered with Yoho and Trilogy at 15-33-60-20W5 was drilled and completed
in the summer of 2010. That well produced 2.1mmcf/d and 75bbl/mmcf of 56°API condensate from only six of
the planned 13 stages because of a rupture in the liner. The well is currently yielding 100bbl/mmcf of NGL’s
since April, comprised of 63% condensate, 15% butane and 22% propane. Along with its partners, Celtic plans
to drill another horizontal in 2H11 (33.3% WI). Celtic holds 145 net sections of deep rights, of which they
believe 100 net sections will ultimately be prospective for the Duvernay.
Cequence (CQE CN; C$3.80); Rating: Outperform; Target: C$4.25
Net Sections: 11
Chevron (CVX US; US$94.07); Rating: Outperform; Target: US$117.00
Net Sections: 313
Chevron holds nearly 200,000 net acres of land targeting the Duvernay shales. Its first horizontal is licensed at
04-21-059-19W5 (Kaybob), while its second horizontal is licensed at 06-22-062-18W5 (Fox Creek). We believe
the second license represents a key well for Chevron and the entire Duvernay play, as it will be testing the
so-called ‘oil window.’ To our knowledge, Chevron intends to be one of the most active producers in the area,
with plans to drill up to 10 wells over the next twelve months. Based on the recent licenses, we can surmise that
Chevron participated in both the 15 Dec 2009 and 7 July 2010 land sales.
Chinook (CKE CN; C$1.83); Rating: Outperform; Target: C$3.50
Net Sections: 68
15 August 2011
38
Macquarie Research
Connacher (CLL CN; C$0.74); Rating: Outperform; Target: C$1.75
Net Sections: 28
ConocoPhilips (COP US; US$65.52); Rating: Neutral; Target: US$74.00
Net Sections: 135
Conoco has licensed two Duvernay horizontals in the Willesden Green area in what appears to be the liquidsrich gas/oil window of the play. We also understand that in the coming months, Conoco is set to license another
horizontal Duvernay well in the area.
Crew (CR CN; C$12.58); Rating: Outperform; Target: C$23.00
Net Sections: 23
Crew has no imminent plans to drill a Duvernay well, but is monitoring activity.
Daylight (DAY CN; C$7.76); Rating: Neutral; Target: C$9.75
Net Sections: 203
During 2011, Daylight has expended ~C$100m at Crown land sales, primarily focused on the Duvernay shale.
In total, Daylight controls over 130,000 net acres of Duvernay rights in Alberta, which it believes are prospective
for oil and liquids rich natural gas. Daylight plans to initiate a four well pilot project in Q1 2012, with an initial
three wells planned in Pembina and one in the Kaybob area.
15 August 2011
39
Macquarie Research
Delphi (DEE CN; C$2.30); Rating: Outperform; Target: C$2.75
Net Sections: 79
Delphi acquired approximately 52,200 net acres (79 sections) in the Sturgeon Lake area in 1H10. Initial plans
are to complete a reservoir study including an analysis of the cores, fluid type, and other key reservoir
characteristics before selecting a drilling location in 2012. Based on its preliminary technical data, the company
estimates the thickness of the Duvernay to be 16–32m (average 25m), with average mineralogical quartz plus
carbonate content of 72wt% and clay content of 20wt%.
Encana (ECA US; US$26.00); Rating: Neutral; Target: US$35.00
Net Sections: 570
Encana has been fairly quiet on their Duvernay ambitions up until recently. In late 2010, the company drilled a
vertical delineation well in order to gather the necessary core/technical data. Plans for 2H11 will be to drill at least
2 wells. Altogether, the company holds nearly 365,000 net acres at Simonette, Kaybob, and Pembina – one of the
largest land positions in our group. We believe that Encana must have been active at recent Duvernay land
sales as most of their disclosed land position does not show up within the public realm.
Enerplus (ERF CN; C$28.52); Rating: Outperform; Target: C$32.75
Net Sections: 59
Galleon (GO CN; C$2.81); Not Rated
Net Sections: 137
Galleon is one of the first producers to test the Duvernay shales, re-entering and fracing (19 ton frac) an
existing well in the Puskwa region back in early 2010. Nothing much was revealed other than the presence of
gas. Separately, based on well logs, the company sees up to ~32m of net Duvernay pay with porosity greater
than 3% on a Limestone density scale. We estimate that Galleon holds 137 net sections of Duvernay rights in
the greater Peace River Arch, likely all in the oil widow and normally-to-underpressured portion of the play.
15 August 2011
40
Macquarie Research
Husky (HSE CN; C$25.75); Rating: Neutral; Target: C$30.00
Net Sections: 31
In the second quarter, Husky drilled, cored and logged a well at Kaybob to evaluate the Duvernay liquids-rich
gas play. Based on the result of this well, the company plans to drill an offsetting horizontal well in 3Q11 to
establish the productive capability of this zone. A second vertical test well is also planned for the third quarter to
evaluate the play on other existing landholdings. Overall, Husky’s position is considerably smaller than other
large cap players like Encana, Talisman, and Chevron.
Longview (LNV CN; C$10.60); Not Rated
Net Sections: 123
Adjacent to Delphi, Longview holds ~123 net sections of undeveloped land in the ‘oil window’ of the Duvernay
shales. The company has no immediate plans to drill a horizontal well; however, it is looking to core the
Duvernay at Sunset. After coring operations, the company plans to convert the well to a water injector as part of
its plans to optimize the Montney waterflood at Sunset.
Mako (MKE AU; A$0.12) Not Rated
Transerv (TSV AU; A0.33) Not Rated
Kilgore (KOG AU; A$0.002) Not Rated
Net Sections: 123
NAL (NAE CN; C$9.95); Rating: Neutral; Target: C$12.00
Net Sections: 170
15 August 2011
41
Macquarie Research
Northern Patriot (Private); Not Rated
Net Sections: 60
Northern Patriot holds 60 net sections of Duvernay rights in the East Shale Basin all situated in the oil window of
the play. Interestingly, its lands are adjacent to the 06-07-38-27W4 well that recovered over 1,400m of clean oil
from two DSTs in the Duvernay formation. The 06-07 well also has a pressure gradient calculated at 0.48psi/ft,
which is 10% overpressured. The company plans to drill its first Duvernay vertical in 4Q11 or early 2012.
Penn West (PWT CN; C$19.93); Rating: Outperform; Target: C$26.00
Net Sections: 156
Penn West is one of the largest land holders in Pembina region, driven by its legacy oil assets targeting the
prolific Cardium formation. While the company has not yet revealed its land position, we calculate via
geoSCOUT that Penn West holds ~100,000 net acres. To our knowledge, there are currently no plans to drill a
well here.
PetroBakken (PBN CN; C$10.69); Rating: Neutral; Target: C$16.00
Net Sections: 190
Interestingly, PetroBakken holds 190 net undeveloped sections for the emerging Nordegg, Montney, Duvernay,
and Swan Hills formation. While the segregation of lands is not detailed, it plans to drill a well into each of these
formations by the end of 2011.
PetroSpirit (Private); Not Rated
Net Sections: 13
15 August 2011
42
Macquarie Research
Sirius (Private); Not Rated
Net Sections: 35
Sonde (SOQ CN; C$2.37); Not Rated
Net Sections: 93
Sonde Resources (formerly Canadian Superior) holds 60,000 net acres in the greater Kaybob region, stretching
from Windfall, Fox Creek, to as far north as Grand Prairie. As can be seen, Sonde’s lands are all situated in the
oil/liquids rich gas window of the play. The company’s 2011 program will involve at least one horizontal
exploration well in 2H11.
Talisman (TLM CN; C$16.70); Rating: Outperform; Target: C$24.00
Net Sections: 563
On its 2Q11 earnings release, Talisman unveiled it holds 360,000 net acres of Duvernay prospective land at an
average cost of C$2,000/acre. We believe a majority of these lands are located in the greater Wild River/Kaybob
region. Talisman’s initial plans include having two rigs running over 2H11 to test the Duvernay.
Terra (TT CN; C$0.86); Not Rated
Net Sections: 50
15 August 2011
43
Macquarie Research
TAQA (Private); Not Rated
Net Sections: 124
TAQA has drilled one Duvernay horizontal at 16-36-61-19W5. We estimate TAQA’s Duvernay position at nearly
124 net sections.
Trilogy (TET CN; C$26.35); Not Rated
Net Sections: 207
Along with Yoho and Celtic, Trilogy operated the second Duvernay horizontal (33.3% W.I) located at 03-13-60-20W5.
The well was drilled early this year, and took 50 days to drill. It tested at 5.2mmcf/d plus 390bbl/d of liquids
(including 180bbl/d of condensate). Unfortunately, the total cost for the well came-in at C$17.5m, with the
majority of it driven by the completion operations. In total, Trilogy holds a total of 207 net sections. Trilogy also
drilled a vertical well at 9-18-64-19W5 to test the oil window of the Duvernay. Note on its 2Q earning release, the
company indicated the liquids yield for its 03-13 exploration well appears to be north of 90bbl/mmcf compared
with its original yield of 75bbl/mmcf. Trilogy, along with its partners, plans to drill another horizontal well in 2H11
(33.3% WI).
Vero (VRO CN; C$4.53); Rating: Outperform; Target: C$7.00
Net Sections: 50
WestFire (WFE CN; C$5.82); Rating: Outperform; Target: C$11.00
Net Sections: 45
15 August 2011
44
Macquarie Research
Yoho (YO CN; C$3.30); Not Rated
Net Sections: 18
Yoho accumulated a total of 17.7 net sections in the heart of the Wild River/Kaybob region. Yoho, along with its
partners, plans to drill another horizontal well in 2H11 (33.3% WI). Yoho has also licensed one vertical well
targeting the Duvernay formation at 16-24-38-07W5 in the Ferrier area.
Note: share prices as at 11 August 2011.
Source: Bloomberg, Company reports, geoSCOUT, Macquarie Research, August 2011
Fig 38
Duvernay producers – Summary of Canadian coverage
Company
Ticker
Analyst
Angle Energy Inc.
Athabasca Oil Sands Corp.
Bellatrix Exploration Ltd.
Birchcliff Energy Ltd.
Bonavista Energy Corp.
Celtic Exploration Ltd.
Cequence Energy Ltd.
Chinook Energy Inc.
Connacher Oil & Gas Ltd.
Crew Energy Inc.
Daylight Energy Ltd.
Delphi Energy Corp.
Encana Corporation
Enerplus Corp.
Husky Energy Inc.
NAL Energy Corp.
Penn West Exploration
PetroBakken Energy Ltd.
Talisman Energy Inc.
Vero Energy Inc.
WestFire Energy Ltd.
NGL CN
ATH CN
BXE CN
BIR CN
BNP CN
CLT CN
CQE CN
CKE CN
CLL CN
CR CN
DAY CN
DEE CN
ECA US
ERF CN
HSE CN
NAE CN
PWT CN
PBN CN
TLM CN
VRO CN
WFE CN
Kwan
Feltin
Lopez
Kwan
Lopez
Kwan
Kwan
Kwan
Feltin
Feltin
Lopez
Kwan
Feltin
Lopez
Feltin
Lopez
Lopez
Lopez
Feltin
Lopez
Kwan
08/11/11 price
C$8.15
C$13.32
C$4.15
C$13.10
C$25.91
C$21.18
C$3.80
C$1.83
C$0.74
C$12.58
C$7.76
C$2.30
US$26.00
C$28.52
C$25.75
C$9.95
C$19.93
C$10.69
C$16.70
C$4.53
C$5.82
Rating
Outperform
Outperform
Outperform
Neutral
R
Outperform
Outperform
Outperform
Outperform
Outperform
Neutral
Outperform
Neutral
Outperform
Neutral
Neutral
Outperform
Neutral
Outperform
Outperform
Outperform
Target price
C$11.50
C$20.00
C$6.25
C$12.00
R
C$29.00
C$4.25
C$3.50
C$1.75
C$23.00
C$9.75
C$2.75
US$35.00
C$32.75
C$30.00
C$12.00
C$26.00
C$16.00
C$24.00
C$7.00
C$11.00
Source: Bloomberg, Macquarie Research, August 2011
15 August 2011
45
Macquarie Research
Important disclosures:
Recommendation definitions
Volatility index definition*
Financial definitions
Macquarie - Australia/New Zealand
Outperform – return >3% in excess of benchmark return
Neutral – return within 3% of benchmark return
Underperform – return >3% below benchmark return
This is calculated from the volatility of historical price
movements.
All "Adjusted" data items have had the following
adjustments made:
Added back: goodwill amortisation, provision for
catastrophe reserves, IFRS derivatives & hedging, IFRS
impairments & IFRS interest expense
Excluded: non recurring items, asset revals, property
revals, appraisal value uplift, preference dividends &
minority interests
Benchmark return is determined by long term nominal
GDP growth plus 12 month forward market dividend yield
Very high–highest risk – Stock should be expected
to move up or down 60–100% in a year – investors
should be aware this stock is highly speculative.
High – stock should be expected to move up or
down at least 40–60% in a year – investors should
be aware this stock could be speculative.
Macquarie – Asia/Europe
Outperform – expected return >+10%
Neutral – expected return from -10% to +10%
Underperform – expected return <-10%
Medium – stock should be expected to move up or
down at least 30–40% in a year.
Macquarie First South - South Africa
Outperform – expected return >+10%
Neutral – expected return from -10% to +10%
Underperform – expected return <-10%
Low–medium – stock should be expected to move
up or down at least 25–30% in a year.
Macquarie - Canada
Outperform – return >5% in excess of benchmark return
Neutral – return within 5% of benchmark return
Underperform – return >5% below benchmark return
Low – stock should be expected to move up or
down at least 15–25% in a year.
* Applicable to Australian/NZ/Canada stocks only
Macquarie - USA
Outperform (Buy) – return >5% in excess of Russell 3000
index return
Neutral (Hold) – return within 5% of Russell 3000 index
return
Underperform (Sell)– return >5% below Russell 3000
index return
Recommendations – 12 months
Note: Quant recommendations may differ from
Fundamental Analyst recommendations
EPS = adjusted net profit / efpowa*
ROA = adjusted ebit / average total assets
ROA Banks/Insurance = adjusted net profit /average
total assets
ROE = adjusted net profit / average shareholders funds
Gross cashflow = adjusted net profit + depreciation
*equivalent fully paid ordinary weighted average number
of shares
All Reported numbers for Australian/NZ listed stocks are
modelled under IFRS (International Financial Reporting
Standards).
Recommendation proportions – For quarter ending 30 June 2011
Outperform
Neutral
Underperform
AU/NZ
50.37%
36.86%
12.77%
Asia
64.60%
21.22%
14.18%
RSA
64.62%
29.23%
6.15%
USA
45.63%
51.30%
3.07%
CA
67.74%
28.50%
3.76%
EUR
48.02% (for US coverage by MCUSA, 12.44% of stocks covered are investment banking clients)
Company Specific Disclosures:
Macquarie Capital Markets Canada Ltd has received compensation for acting as a financial advisor to Daylight Energy, PetroBakken Energy, Talisman
Energy, and WestFire Energy within the past two years.
Macquarie Capital Markets Canada Ltd has received compensation for acting as a financial agent (underwriter) for Angle Energy, Bellatrix, Bonavista Energy
Corp., Celtic Exploration, Cequence Energy, Connacher Oil and Gas, Crew Energy, Daylight Energy, Delphi Energy, Enerplus Corp., Husky Energy, NAL
Energy, Vero Energy, and WestFire Energy within the past two years.
An associate controls shares in Chinook Energy and Connacher Oil and Gas.
Macquarie Capital Markets North America Ltd., which is a registered broker-dealer and member of FINRA, accepts responsibility for the contents of reports
issued by Macquarie Capital Markets Canada Ltd in the United States and sent to US persons. Any US person wishing to effect transactions in the securities
described in the reports issued by Macquarie Capital Markets Canada Ltd should do so with Macquarie Capital Markets North America Ltd. The Research
Distribution Policy of Macquarie Capital Markets Canada Ltd is to allow all clients that are entitled to have equal access to our research.
Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures.
Analyst Certification:
The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the
compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The
analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN 94 122
169 279 (AFSL No. 318062) (MGL) and its related entities (the Macquarie Group) and has taken reasonable care to achieve and maintain independence
and objectivity in making any recommendations.
General Disclaimers:
Macquarie Securities (Australia) Ltd; Macquarie Capital (Europe) Ltd; Macquarie Capital Markets Canada Ltd; Macquarie Capital Markets North America Ltd;
Macquarie Capital (USA) Inc; Macquarie Capital Securities Ltd and its Taiwan branch; Macquarie Capital Securities (Singapore) Pte Ltd; Macquarie
Securities (NZ) Ltd; Macquarie First South Securities (Pty) Limited; Macquarie Capital Securities (India) Pvt Ltd; Macquarie Capital Securities (Malaysia) Sdn
Bhd; Macquarie Securities Korea Limited and Macquarie Securities (Thailand) Ltd are not authorized deposit-taking institutions for the purposes of the
Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008
583 542 (MBL) or MGL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of any of the above mentioned entities. MGL
provides a guarantee to the Monetary Authority of Singapore in respect of the obligations and liabilities of Macquarie Capital Securities (Singapore) Pte Ltd
for up to SGD 35 million. This research has been prepared for the general use of the wholesale clients of the Macquarie Group and must not be copied,
either in whole or in part, or distributed to any other person. If you are not the intended recipient you must not use or disclose the information in this research
in any way. If you received it in error, please tell us immediately by return e-mail and delete the document. We do not guarantee the integrity of any e-mails
or attached files and are not responsible for any changes made to them by any other person. MGL has established and implemented a conflicts policy at
group level (which may be revised and updated from time to time) (the "Conflicts Policy") pursuant to regulatory requirements (including the FSA Rules)
which sets out how we must seek to identify and manage all material conflicts of interest. Nothing in this research shall be construed as a solicitation to buy
or sell any security or product, or to engage in or refrain from engaging in any transaction. In preparing this research, we did not take into account your
investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this research, you need to consider, with
or without the assistance of an adviser, whether the advice is appropriate in light of your particular investment needs, objectives and financial circumstances.
There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless.
International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market
or economic conditions, which may adversely affect the value of the investment. This research is based on information obtained from sources believed to be
reliable but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the
information or opinions in it. Opinions expressed are subject to change without notice. No member of the Macquarie Group accepts any liability whatsoever
for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Clients
should contact analysts at, and execute transactions through, a Macquarie Group entity in their home jurisdiction unless governing law permits otherwise.
15 August 2011
46
Macquarie Research
Country-Specific Disclaimers:
Australia: In Australia, research is issued and distributed by Macquarie Securities (Australia) Ltd (AFSL No. 238947), a participating organisation of the
Australian Securities Exchange. New Zealand: In New Zealand, research is issued and distributed by Macquarie Securities (NZ) Ltd, a NZX Firm. Canada:
In Canada, research is prepared, approved and distributed by Macquarie Capital Markets Canada Ltd, a participating organisation of the Toronto Stock
Exchange, TSX Venture Exchange & Montréal Exchange. Macquarie Capital Markets North America Ltd., which is a registered broker-dealer and member of
FINRA, accepts responsibility for the contents of reports issued by Macquarie Capital Markets Canada Ltd in the United States and sent to US persons. Any
person wishing to effect transactions in the securities described in the reports issued by Macquarie Capital Markets Canada Ltd should do so with
Macquarie Capital Markets North America Ltd. The Research Distribution Policy of Macquarie Capital Markets Canada Ltd is to allow all clients that are
entitled to have equal access to our research. United Kingdom: In the United Kingdom, research is issued and distributed by Macquarie Capital (Europe)
Ltd, which is authorised and regulated by the Financial Services Authority (No. 193905). Germany: In Germany, research is issued and distributed by
Macquarie Capital (Europe) Ltd, Niederlassung Deutschland, which is authorised and regulated in the United Kingdom by the Financial Services Authority
(No. 193905). France: In France, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated in the United
Kingdom by the Financial Services Authority (No. 193905). Hong Kong & Mainland China: In Hong Kong, research is issued and distributed by Macquarie
Capital Securities Ltd, which is licensed and regulated by the Securities and Futures Commission. In Mainland China, Macquarie Securities (Australia)
Limited Shanghai Representative Office only engages in non-business operational activities excluding issuing and distributing research. Only non-A share
research is distributed into Mainland China by Macquarie Capital Securities Ltd. Japan: In Japan, research is issued and distributed by Macquarie Capital
Securities (Japan) Limited, a member of the Tokyo Stock Exchange, Inc. and Osaka Securities Exchange Co. Ltd (Financial Instruments Firm, Kanto
Financial Bureau (kin-sho) No. 231, a member of Japan Securities Dealers Association, Financial Futures Association of Japan and Japan Securities
Investment Advisers Association). India: In India, research is issued and distributed by Macquarie Capital Securities (India) Pvt Ltd., 92, Level 9, 2 North
Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051, India, which is a SEBI registered Stock Broker having membership with
National Stock Exchange of India Limited (INB231246738) and Bombay Stock Exchange Limited (INB011246734). Malaysia: In Malaysia, research is issued
and distributed by Macquarie Capital Securities (Malaysia) Sdn. Bhd. (Company registration number: 463469-W) which is a Participating Organisation of
Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission. Taiwan: Information on
securities/instruments that are traded in Taiwan is distributed by Macquarie Capital Securities Ltd, Taiwan Branch, which is licensed and regulated by
the Financial Supervisory Commission. No portion of the report may be reproduced or quoted by the press or any other person without authorisation from
Macquarie. Nothing in this research shall be construed as a solicitation to buy or sell any security or product. Thailand: In Thailand, research is issued and
distributed by Macquarie Securities (Thailand) Ltd, a licensed securities company that is authorized by the Ministry of Finance, regulated by the Securities
and Exchange Commission of Thailand and is an exchange member no. 28 of the Stock Exchange of Thailand. The Thai Institute of Directors Association
has disclosed the Corporate Governance Report of Thai Listed Companies made pursuant to the policy of the Securities and Exchange Commission of
Thailand. Macquarie Securities (Thailand) Ltd does not endorse the result of the Corporate Governance Report of Thai Listed Companies but this Report can
be accessed at: http://www.thai-iod.com/en/publications.asp?type=4. South Korea: In South Korea, unless otherwise stated, research is prepared, issued
and distributed by Macquarie Securities Korea Limited, which is regulated by the Financial Supervisory Services. Information on analysts in MSKL is
disclosed at http://dis.kofia.or.kr/fs/dis2/fundMgr/DISFundMgrAnalystPop.jsp?companyCd2=A03053&pageDiv=02. South Africa: In South Africa, research is
issued and distributed by Macquarie First South Securities (Pty) Limited, a member of the JSE Limited. Singapore: In Singapore, research is issued and
distributed by Macquarie Capital Securities (Singapore) Pte Ltd (Company Registration Number: 198702912C), a Capital Markets Services license holder
under the Securities and Futures Act to deal in securities and provide custodial services in Singapore. Pursuant to the Financial Advisers (Amendment)
Regulations 2005, Macquarie Capital Securities (Singapore) Pte Ltd is exempt from complying with sections 25, 27 and 36 of the Financial Advisers Act. All
Singapore-based recipients of research produced by Macquarie Capital (Europe) Limited, Macquarie Capital Markets Canada Ltd, Macquarie First South
Securities (Pty) Limited and Macquarie Capital (USA) Inc. represent and warrant that they are institutional investors as defined in the Securities and Futures
Act. United States: In the United States, research is issued and distributed by Macquarie Capital (USA) Inc., which is a registered broker-dealer and
member of FINRA. Macquarie Capital (USA) Inc, accepts responsibility for the content of each research report prepared by one of its non-US affiliates when
the research report is distributed in the United States by Macquarie Capital (USA) Inc. Macquarie Capital (USA) Inc.’s affiliate’s analysts are not registered
as research analysts with FINRA, may not be associated persons of Macquarie Capital (USA) Inc., and therefore may not be subject to FINRA rule
restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Any persons
receiving this report directly from Macquarie Capital (USA) Inc. and wishing to effect a transaction in any security described herein should do so with
Macquarie Capital (USA) Inc. Important disclosure information regarding the subject companies covered in this report is available at
www.macquarie.com/research/disclosures, or contact your registered representative at 1-888-MAC-STOCK, or write to the Supervisory Analysts, Research
Department, Macquarie Securities, 125 W.55th Street, New York, NY 10019.
© Macquarie Group
Auckland
Tel: (649) 377 6433
Bangkok
Tel: (662) 694 7999
Calgary
Tel: (1 403) 218 6650
Denver
Tel: (303) 952 2800
Frankfurt
Geneva
Tel: (069) 509 578 000 Tel: (41) 22 818 7777
Hong Kong
Tel: (852) 2823 3588
Jakarta
Tel: (62 21) 515 1818
Johannesburg
Tel: (2711) 583 2000
Kuala Lumpur
Tel: (60 3) 2059 8833
London
Tel: (44 20) 3037 4400
Manila
Tel: (63 2) 857 0888
Melbourne
Tel: (613) 9635 8139
Montreal
Tel: (1 514) 925 2850
Mumbai
Munich
Tel: (91 22) 6653 3000 Tel: (089) 2444 31800
New York
Tel: (1 212) 231 2500
Paris
Tel: (33 1) 7842 3823
Perth
Tel: (618) 9224 0888
Seoul
Tel: (82 2) 3705 8500
Shanghai
Tel: (86 21) 6841 3355
Singapore
Tel: (65) 6601 1111
Taipei
Tokyo
Tel: (886 2) 2734 7500 Tel: (81 3) 3512 7900
Toronto
Tel: (1 416) 848 3500
Sydney
Tel: (612) 8232 9555
Available to clients on the world wide web at www.macquarieresearch.com and through Thomson Financial, FactSet, Reuters, Bloomberg, CapitalIQ and
TheMarkets.com.
15 August 2011
47
Research
Heads of Equity Research
John O’Connell (Global Co-Head)
David Rickards (Global Co-Head)
Andrew Root (US)
Stephen Harris (Canada)
(612) 8232 7544
(612) 8237 1159
(1 212) 231 2336
(1 416) 848 3655
Consumer Discretionary & Healthcare
Internet
Sumit Malhotra (Toronto)
Edward Ditmire (Head of Diversified
Financials)
(1 212) 231 2634
Alan Zimmermann
Amit Kumar (New York)
Ray Iardella (New York)
Bill Broomall (New York)
Industrials
David Pupo (Toronto)
Chemicals
(1 416) 848 3505
Cooley May (New York)
Energy
Sameer Rathod (New York)
(1 303) 952 2751
(1 212) 231 2622
US Refining
Chi Chow (Denver)
Nigel Browne (Denver)
(1 303) 952 2757
(1 303) 952 2758
(44 20) 3037 4085
Canadian Oil Sands/Heavy Oil Producers
Chris Feltin (Calgary)
(1 403) 539 8544
Canadian Independents
(1 403) 539 8544
Canadian Integrateds
Pierre Vaillancourt (Toronto)
Tony Lesiak (Toronto)
Michael Gray (Vancouver)
(1 212) 231 2586
(1 212) 231 2474
(1 416) 848 3647
(1 416) 848 3594
(1 604) 639 6372
(1 403) 539 8544
Telecommunications
Business & Computer Services
(1 403) 539 8542
(1 403) 539 8529
(1 403) 539 4355
Kevin Smithen (New York)
Greg MacDonald (Toronto)
Kevin McVeigh (New York)
Financials
Amy Yong (New York)
(1 212) 231 0635
Angie Storozynski (Head of US Utilities &
Alternative Energy)
(1 212) 231 2569
Andrew Weisel (New York)
(1 212) 231 1159
Commodities & Precious Metals
(44 20) 3037 4271
(44 20) 3037 4334
Economics and Strategy
Stephen Harris (Toronto)
Rebecca Hiscock-Croft (US Economist)
(1 416) 848 3655
(1 212) 231 6115
(1 212) 231 0695
(1 416) 628 3934
Macquarie:
www.macquarie.com.au/research
Thomson:
www.thomson.com/financial
Reuters:
www.knowledge.reuters.com
Bloomberg:
MAC GO
Factset:
http://www.factset.com/home.aspx
CapitalIQ
www.capitaliq.com
TheMarkets.com www.themarkets.com
Contact Gareth Warfield for access (612) 8232 3207
(1 212) 231 6191
(1 212) 231 2624
(1 212) 231 2577
(1 212) 231 2602
(1 212) 231 2538
Email addresses
FirstName.Surname@macquarie.com
eg. David.Rickards@macquarie.com
Sales
Trading
US Sales
(612) 8232 5999
Head of US Equities
(1 212) 231 1184
Head of Canadian Equities
Alex Rothwell (Toronto)
Tim Nollen (New York)
(1 212) 231 8047
(1 212) 231 8065
(1 212) 231 8052
(1 416) 848 3687
(1 212) 231 0662
Head of Global Cash Equities
Ken Savio (New York)
(1 212) 231 2493
Media
Find our research at
(1 212) 231 8032
Equities
Stevan Vrcelj (Sydney)
Kelly Dougherty (New York)
(1 212) 231 8063
Banks/Trust Banks
Thomas Alonso (Head of Banks)
Jonathan Elmi (New York)
Bill Young (New York)
Sumit Malhotra (Toronto)
John Moran (New York)
(1 212) 231 2618
Solar & Clean Technology
Venkat Eleswarapu (New York)
Charles Lowe (New York)
Victor Morange (New York)
Cable & Satellite
Asset Managers
Brad Zelnick (New York)
Quantitative Analysis
TMET
Cristina Lopez (Calgary)
David Popowich (Calgary)
Ray Kwan (Calgary)
(1 415) 762 5033
(1 212) 231 8068
(1 212) 231 6386
(1 416) 848 3696
Mortgage REITs
Matthew Howlett (New York)
Shawn Webster (San Francisco)
Jim Lennon (London)
Kona Haque (London)
REITs
Robert Stevenson (Head of US REITs)
Ki Bin Kim (New York)
Michael Smith (Toronto)
(1 212) 231 0644
(1 212) 231 0643
Utilities & Alternative Energy
Materials
International/Canadian Oil & Gas Producers
Campbell Anthony (New York)
(1 212) 231 8081
(1 212) 231 8013
(1 212) 231 2454
(1 212) 231 8039
Real Estate
US Integrated
Jason Gammel (London)
(1 212) 231 8063
Global Metals & Mining
US Oilfield Services & Drilling
Ben Schachter (Head of TMET)
Tom White (New York)
Software & IT Hardware
Construction and Engineering/Machinery
US Exploration & Production
IA RANKING REPORT 201001
Semiconductors
(1 212) 231 8076
Property & Casualty Insurance
Consumer Staples and Agriculture
Joe Magner (Denver)
John Nelson (New York)
(1 416) 848 3687
Market Structure
Matthew Howlett (New York)
(1 212) 231 2612
(1 212) 231 6369
Gaming & Leisure
Chad Beynon (New York)
TMET – cont’d
Life Insurance
Mortgage & Consumer Finance
Life Sciences & Technology
Jon Groberg (Head of US Discretionary
& Healthcare)
Dane Leone (New York)
Financials – cont’d
(1 416) 848 3677
Greg Jannetta (New York)
Roni Gudell (Boston)
Peter Doerr (Chicago)
Susan Reid (Toronto)
Ross Peet (San Francisco)
US Sales Trading
(1 212) 231 2495
(1 617) 598 2504
(1 312) 660 9052
(1 416) 848 3558
(1 415) 762 5069
(1 212) 231 8004
Canada Sales
Craig Brenner (Toronto)
(1 416) 848 3626
(1 212) 231 2494
Canada Trading
Perry Catellier (Toronto)
(1 416) 848 3619
International Sales Trading
Chris Reale (New York)
US Financial Specialist Sales
Blair Smith (New York)
Austin Graham (New York)
(1 212) 231 2555