NEWS FILE PHOTO
An oil well is seen near Brooks in August 2015. Alberta will ease its oil production curtailment program in August.
cgallant@medicinehatnews.com@CollinGallant
A major petroleum producer in southeast Alberta says the province’s oil production curtailment program stabilized its prices in late 2018 and the outlook is positive as it plans to triple its local exploration budget for 2019.
IPC Alberta spent its first year of operating the Suffield Block completing a “gas optimization,” program and restarting oil exploration at sprawling spread after a five-year hiatus.
The company, which late in the year acquired northern Alberta based heavy-oil producer, Black Pearl Resources, says it’s executed well on creating a Alberta operating unit, and has boosted production with positive drilling results.
In year-end financial statements released Tuesday, the global producer stated the largest portion of its 2019 capital budget will be spent in Alberta where it expects stable oil pricing to continue in the year ahead.
“IPC is not affected by the production curtailments but has benefited from the sharp improvements in the differential witnessed since the policy was announced,” IPC stated in it managers discussion and analysis filing.
“All in all, the oil market appears to be far more balanced than it was in 2018 which presents a more favourable investment climate for our growth plans going forward.”
In December, the Alberta government announced the province’s largest oil producers would be required to reduced their output by 8.7 per cent, or 325,000 barrels per day, in hopes of bringing down inventories. That has closed a price differential on oil shipped out of province, and last month, the province announced it would ease the curtailment.
Integrated producers, those with refining wings that benefit from lower pricing, have panned the move, while smaller companies and other majors have expressed support.
According to IPC’s year-end report, prices realized at Sufflied ranged from US$40.13 to US$50.30 averaged over the first three quarters, but that figure fell to US$21.30 in the final three months of 2018, before recovering in January.
The whole year average price on Alberta gas was C$2.54 per gigajoule, slightly ahead of IPC’s prediction of C$2.40.
IPC’s capital guidance states a combined effort at Suffield and several Black Pearl projects in northern Alberta combined could cost between US$43 million and US$63 million. There is no breakdown of spending in each area, but specific to Suffield, ICP plans to complete 17 oil wells mostly in later 2019 and recomplete as many as 150 natural gas wells.
The previous work, including six oil wells drilled lin late 2018, boosted production on the block of leases by about 9 per cent, the company said.
Over the last year the company increased its capital spending in Canada by about 40 per cent to US$15 million on drilling and a “gas optimization” plan that is “ahead of schedule” according to company documents.
IPC stock price rose sharply following the release, gaining about 25 per cent over three days to sit at C$5.59 during trading mid-day on Thursday.
The company ended the year with global production of 34,600 barrels of oil equivalent per day, including 23,900 barrels from Suffield operations, and posted adjusted earnings of US$103.6 million for the whole year.
