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|Why should I consider an Investment in Pennant Energy Inc?
Pennant Energy Inc. TSX-V- PEN, is a junior oil and gas exploration and production company in western Canada. The company's focus is currently on its core Bigstone play in west central Alberta targeting the liquids rich Montney Shale formation. Pennant also has several non-core producing oil and gas properties that are located in south and west central Alberta.
Located 250 km west of Edmonton, the Montney Shale is attractive due to its thick, highly pressurized formation with significant recoverable natural gas reserves with high NGL content. Other attractive characteristics of the Montney Shale are intermediate drilling depths, sweet gas, fracable rock, relatively flat declines compared to other shale plays, and very high estimated recoveries. About 80-90 ft of pay thickness has been mapped across the entire Bigstone property. After spudding in late August 2011, the initial Bigstone well was drilled to a total depth of 3,818m. In October 2011, the well was successfully completed and flow tested using a 12 stage fracture treatment over the 1,254m horizontal portion. In June 2012, the well was tied in and during the first 42 days of operation produced at an average rate of 1.61 mmcf/d and 72.8 bbls/d of condensate for a combined oil equivalent total of 341 boe/d (128 boe/d net to Pennant). By early January 2012, Pennant and its partners drilled a second Montney well to 5,512m, including a horizontal leg of 2,744m. During the fracing process, only 6 of the 23 stages were successful due to a mechanical complication. This well was tied in on July 16, 2012 and for the first 7 days production averaged 1.75 mmcf/d with 153 bbls/d of condensate for a total of 445 boe/d (111 boe/d net to Pennant). In February 2012, the company and its partners signed a pooling agreement covering lands held jointly by majors Trilogy Energy and TAQA North for the purpose of drilling an extended reach horizontal well on the pooled lands. Under this pooling agreement, Pennant's third Bigstone well spudded in early March 2012, reached total depth of 5,336m by early April 2012, and was completed with a 23-stage fracture program. During the well's final 24-hour testing period, it flowed 2.87 mmcf/d (360 mcf/d net to Pennant) and 510 bpd (64 bpd net) of condensate and load fluid. The third well was tied-in on November 25, 2012.
Pennant's interest in 4,480 acres of contiguous lands at Bigstone represents a potential drilling inventory of 13 to 27 development locations depending on the length of the horizontal leg of each well. With the first three wells now providing production revenue, the focus of management will be to prepare Pennant for participation in the drilling and completion of the fourth Bigstone well in 2013. Pennant is now a cash flow producing company with no debt and an attractive land position in the highly coveted Bigstone Montney play.
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